Which statement regarding jumbo loans is NOT correct?

The statement that jumbo loans are more challenging to obtain compared to flexible rate loans is not accurate. Jumbo loans are typically associated with stricter underwriting guidelines due to their nonconforming nature and higher risk. Therefore, when market conditions make jumbo loans difficult to secure, it does not necessarily imply that flexible rate loans become easier to obtain. In fact, both types of loans can experience tightening in credit availability during challenging market conditions.

In contrast, the other statements about jumbo loans are correct. Jumbo loans generally do have higher interest rates compared to conforming loans, which are loans that meet specific criteria for government backing. Additionally, the spread between the interest rates of jumbo loans and other types of loans does indeed fluctuate based on market factors. Lastly, jumbo loans are classified as nonconforming loans because they exceed the loan limits set by the Federal Housing Finance Agency (FHFA), making them ineligible for purchase by Fannie Mae or Freddie Mac.