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Home buyers in the high-end market are being spurred on by low interest rates to larges mortgages. However, it’s yet to be seen how durable these deals are.

The size of your mortgage loan matters a great deal. Speak with a real estate professional or financial advisor before buying a house.

Loans larger than $400,000, also known as jumbo loans, are more popular now than they have been since the housing boom. A 30-year jumbo mortgage has an average rate of 5.15%. That’s a decrease of 1.26% from two years ago.

Additionally, jumbo loans are even cheaper than loans that are backed by Fannie and Freddie, as well as other federal agencies. Therefore, borrowing in larger amounts is now more appealing than it has been previously. Buyers that may have been unable to afford homes in more pricey markets now have an opportunity opened to them.

The popularity of jumbo loans can be seen in the fact that these types of loans represent almost one sixth of all new mortgages in the first quarter of 2011.

Currently, the cheapest jumbo mortgages are to be found at independent mortgages firms. Though the numbers vary from one area to the next, the typical jumbo loan requires a down payment between 20 and 30 percent. This is up to three times more than the down payment for a smaller loan. In addition to documentation for the past two years including tax returns and net worth, applicants need high credit scores, at least 740.

Soon lenders won’t be able to seek jumbo loans to government-backed agencies at the levels they can now; therefore, borrowers should act soon. With nowhere to unload risk lenders may choose not to offer so many. Futhermore, with added risk interest rates are sure to rise.

The result is that home buyers will find it harder to get financing, perhaps leading to fewer home sales and reduced prices.

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