By Sabrina Karl

If you’ve ever shopped mortgage rates, you’ve probably noticed the wide variety of loan types, many with cryptic names and acronyms. One of these is the jumbo mortgage.

You’d be right to assume that a jumbo mortgage is a really large mortgage. But how big is really large? And what’s different about applying for a jumbo loan?

Most standard loans are guaranteed by Fannie Mae or Freddie Mac, or federal programs like the FHA or VA. All of these agencies have rules for the mortgages they’ll guarantee, so banks stay within those guidelines whenever possible. These are called conforming loans.

One of the primary rule constraints on conforming loans is their maximum amount. Across most of the U.S., the mortgage cannot exceed $548,250. (Keep in mind this is the loan amount, not the property value.)

There are exceptions for high-cost areas, where housing is much more expensive. Instead of $548,250, the cap in high-cost areas can be as high as $822,375. Most of these counties are located around New York, Washington, D.C., and in California, with a few other counties scattered across other states. But most of the U.S. is held to the standard $548,250 limit.

If you’re looking to borrow more than the conforming maximum for your area, a jumbo mortgage is a logical choice. But be prepared that qualifying for one of these super-sized loans is a bit tougher, since these non-federally secured loans are riskier for lenders.

For one, you’ll need a higher credit score. You’ll also likely need a 20% down payment, and may also need to show you have ample cash reserves on hand. Paperwork requirements can also be more onerous for jumbo mortgages, so be prepared that you’ll need to jump through an extra hoop or two if going the jumbo mortgage route.