A jumbo mortgage loan is a mortgage loan that exceeds a conventional mortgage loan in size. Exactly what constitutes a jumbo mortgage loan will therefore vary from one market to another. The term jumbo mortgage loan is chiefly used in the USA.
With all other things equal, lending a large amount of money to one borrower is considered more risky for the lender than lending several smaller amounts of money to several different borrowers. Therefore, lenders tend to be more carefully and require a larger investigation of the applicants financial situation before they approve a jumbo mortgage loan.
Even if you have high-valued real estate to offer as collateral for the jumbo mortgage loan, the lender can be hesitant to approve your application simply because the market for high-priced properties tend to be smaller. There are simply much fewer buyers available for pricey real estate, so a house can be left sitting for sale for a long time.
It can also be difficult for the original lender to find investors willing to purchase a jumbo mortgage loan, thus making it more difficult to spread risk. This is especially true for mortgage loans exceeding $1 million. A mortgage loan application for more than $2 millions will often require backing from private investors before the lending company approves it.
Refinancing a jumbo loan tend to be more costly than refinancing a standard size loan, because the fees paid for refinancing tend to be based on the size of the principal. Of course, you may be capable of negotiating this down if you are a desirable client.
At the time of writing, single-family home mortgage loans above approximately 470,000 USD tend to be regarded as jumbo mortgage loans in continental USA.
In Hawaii, Alaska, Guam and the U.S. Virgin Islands, real estate prices are higher and anything below $625,000 is usually regarded as a standard size mortgage loan.
In the continental U.S., single-family mortgage loans above $650,000 are sometimes referred to as Super Jumbo mortgage loans since they are bigger than the average jumbo loan. Of course, in some neighborhoods, this would still be a normal size (or even small) mortgage loan.