A jumbo mortgage is a type of loan that exceeds the limits set by Fannie Mae and Freddie Mac, which are currently $484,350 for a single-family home in most areas. Because these agencies purchase loans from lenders, they have set maximum amounts to reduce their risk. However, some borrowers need larger loans to finance expensive homes or properties with high value. A jumbo mortgage is designed to meet those needs and can be used for both purchasing a home and refinancing an existing loan. These loans typically come with higher interest rates due to the increased risk taken on by lenders, but they offer flexibility in terms of borrowing amounts and loan options.