A jumbo mortgage is a home loan that exceeds the loan size limit of these government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. The GSEs are limited by the Federal Housing Finance Agency on the size of mortgages they could accept for purchase and securitization. Preventing a jumbo loan means obtaining a mortgage which complies with all the conforming limits set by Freddie Mac and Fannie Mae.
Look up the conforming loan limit to the county in which the home is located that you need to buy or refinance. The federal limit in 2010 is $417,000. High-cost areas might have limits. The Federal Housing Finance Agency site provides a list of the conforming limit for every single county.
Determine whether the funding for the home you want to buy or refinance exceeds the conforming loan limits. If the suggested amount is over the limit for your area, the loan will be regarded as a jumbo loan.
Plan to generate a big down payment or cash-in refinance to make the loan balance below the conforming limit. For example, if you want to refinance a mortgage with a current balance of $500,000 and the conforming limit in the area is $417,000, you would have to do a cash-in refinancing and deposit $83,000 with the mortgage company to bring the new loan down into the conforming limit.