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For the first time in over 20 years, rates on jumbo mortgages are at  or below rates on conventional mortgages and lenders eager for wealthier customers are making deals

As the name implies, a “jumbo” loan is a big one; it exceeds $417,000 in most parts of the country. This limit is set by the large government-owned purchasers of conventional loans, Fannie Mae and Freddie Mac, and sets the limit on the maximum value of any individual mortgage they will purchase from a lender. Fannie and Freddie are large agencies that purchase the bulk of U.S. residential mortgages from banks and other lenders, allowing them to free up liquidity to lend more mortgages. When Fannie and Freddie limits don't cover the full loan amount, the loan is referred to as a "jumbo mortgage". Big loans are not just for big cities, new data shows these loans also account for a significant percentage of real-estate activity in small metro areas. The findings come as real-estate prices throughout the country are picking up and more lenders are giving out jumbo loans. Sales of homes priced at more than $1 million increased an estimated 29.5% in 2013 from a year prior, according to the National Association of Realtors. Lenders originated 25% more private jumbo loans last year in 2013, according to the latest data from Inside Mortgage Finance, a trade publication. "It's a good time to be a jumbo borrower," says Guy Cecala, CEO of Inside Mortgage Finance. Wealthy home buyers signed up for these loans in droves last year because of their low rates and flexible repayment options. More lenders are competing for their attention, which means that rates on jumbo mortgages could rise at a slower pace than other loans. Lenders could also require smaller down payments. Mortgage experts say jumbo rates are likely to remain low this year in comparison with non-jumbos. Lenders are still courting affluent borrowers and want to add more of these loans to their books. The lowest rates will continue to be on the adjustable-rate jumbos while fixed-rate jumbos are expected to get pricier later in the year. Also fueling jumbo loans is the federal government's slow exit from the mortgage market. Many home buyers who are affected have to turn to the private jumbo loan market for a home loan. Approval standards can vary significantly. Borrowers who don't have traditional income documentation or don't have a high credit score should consider lenders that hold jumbo loans on their book rather than selling them to investors, says Gabriel Dalporto, president of the mortgage division at LendingTree.com, a mortgage comparison site with more than 400 lenders. When loans are securitized, they typically have to meet criteria - such as minimum credit score - which are nonnegotiable. Banks that keep these loans can provide more leeway, he says.

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