If a conventional loan falls within Fannie Mae's and Freddie Mac's loan limits, it is referred to as a conforming loan. If the loan amount exceeds the maximum permissible loan amount of these two agencies, it is called a JUMBO, or Non-Conforming Loan.
Conventional lenders typically insist that the borrower put down more than 20% on a JUMBO loan. Interest rates on JUMBO loans generally run between 3/8% to 1/2% higher than Conforming oans. The difference in the interest rate between a Conforming and JUMBO loans is higher when mortgage money is not plentiful. The difference typically decreases with the abundance of mortgage money.