Which statement about jumbo guidelines is accurate?

• A. Loans below the conforming limit use jumbo guidelines.
• B. Loans above the conforming limit use standard conforming guidelines.
• C. Loans above the conforming limit use jumbo guidelines with stricter requirements.
• D. Jumbo guidelines apply only to government-backed loans.

Answer: (C)

Jumbo guidelines apply to loans that exceed the conforming loan limit because those loans aren’t eligible for sale to Fannie Mae or Freddie Mac, so lenders face higher risk. To offset that risk, jumbo loans use stricter underwriting standards—higher credit scores, lower debt-to-income ratios, larger down payments, and more reserve funds. That makes the statement that loans above the conforming limit use jumbo guidelines with stricter requirements the best choice. Loans below the conforming limit follow standard conforming guidelines, and jumbo guidelines aren’t limited to government-backed loans (they’re typically used for conventional loans).