You don’t need a master’s degree in zoology to work out that jumbo loans are big mortgages. But, if you’re in the market for one, you need to know a bit more than that.

What are jumbo loans?

The easiest way to define what a jumbo loan is is to define what it isn’t. It’s not a “conforming loan,” which is one that is eligible to be bought or guaranteed by either Fannie Mae or Freddie Mac, the two government-sponsored enterprises currently behind most new home loans. The reason it’s not eligible is that it busts the cap that limits the size of mortgages Fannie and Freddie are allowed to buy.

Generally speaking, that cap is set for 2013 at $417,000 for a single-family home, but there are two main exceptions:

1. Certain counties (just 199 out of 3,233) across the country are designated by the federal government as being high-priced markets. In those, the cap can be anything between $425,500 and $721,050.
2. Alaska, Guam, Hawaii and the U.S. Virgin Islands have a standard cap of $625,500 — or more in areas designated as having high property prices.

To find out if the home you want to buy is in a county that’s designated as high-priced, visit the Federal Housing Finance Agency’s website. And a list of caps for multi-unit properties (as opposed to single-family homes) is available on Fannie Mae’s website.

How are they different?

Besides their size, jumbo loans differ from conforming ones in a number of respects. This is because a lender shifts much of the risk to Fannie or Freddie when one of those buys or guarantees a mortgage, and may retain more when it doesn’t. Traditionally, this has meant that, compared with conforming mortgages, jumbo loans generally:

1. Require a lower “loan-to-value ratio,” which means you can borrow a smaller proportion of the market value of the home. That translates into bigger down payments.
2. Need a lower “debt-to-income ratio,” which means your total debts (including the new mortgage) should be be smaller, relative to the size of your annual income.
3. Want you to have a higher credit score.
4. Come with a higher interest rate.

Things are changing

Jumbo loans may generally come with higher rates than conforming ones, but something weird happened in September 2013: For the first time ever, according to experts quoted by The Wall Street Journal, jumbo rates became the cheaper alternative. This caused great consternation among people who care about such things. How can borrowing that carries a (small) credit risk be cheaper than loans that effectively — from the lender’s point of view — carry none? It’s Fannie or Freddie that’s on the hook if a conforming loan goes bad.

There are some theories doing the rounds that seek to explain this unique phenomenon, but experts are generally flummoxed. And that means nobody’s sure whether this is a one-time event or something that’s likely to happen occasionally, recur regularly or become the new norm — probably in decreasing order of likelihood.

And there’s another way in which jumbo loans may soon change. Those caps on conforming mortgages only apply to 2013. You might think that, with average home prices rising rapidly, the caps would be raised, and real estate agents and home builders would like to see that. However, The Financial Times reported on Oct. 11 that powerful players in the financial sector are lobbying hard to see them reduced. For example, they’d like the $417,000 base cap to fall to $400,000.

That would make little difference to you if you already want or need a jumbo loan. But it could mean that some who’d prefer a conforming one may from Jan. 1 be excluded from getting one.