Which statement defines a jumbo loan?

• A. A loan that is always conforming.
• B. A nonconforming conventional mortgage exceeding Fannie Mae/Freddie Mac limits.
• C. A government-backed loan.
• D. A conventional loan that is below the conforming limit.

Answer: (B)

Jumbo loans are mortgages that exceed the conforming loan limit set by Fannie Mae and Freddie Mac, so they are nonconforming. Because they’re too large to be sold to these agencies, jumbo loans don’t carry the same eligibility, and they are typically underwritten privately by lenders, often with stricter qualifications such as higher down payments and stronger credit.

This makes the defining statement a nonconforming conventional mortgage that exceeds the Fannie Mae/Freddie Mac limits. A loan that stays within the conforming limit is a conforming conventional loan, and a government-backed loan (like FHA, VA, or USDA) is a different category altogether, not a jumbo. A conventional loan below the conforming limit would not be jumbo.