As home prices have floated upward in the last decade, the dollar threshold for what are called jumbo mortgages has also risen, from $133,250 in 1986 to $333,700 this year. Such mortgages can carry a slightly higher interest rate than what are called conforming loans, those that meet the criteria for purchase by Fannie Mae or Freddie Mac.

But despite the increases in the threshold, the percentage of mortgages in the jumbo category, though it has declined in recent years, remains about what it was a decade ago, at 6.52 percent of all home loans in 2003, compared with 6.37 percent in 1993.

The world of jumbo mortgages — and of "super jumbos," home loans that start at $650,000 and can go up to $10 million or more — is a large one. The top five originators of jumbo mortgages issued loans worth almost $340 billion in 2003, according to Inside Mortgage Finance, a newsletter for executives in the residential mortgage business. Wells Fargo Home Mortgage accounted for $93.4 billion; Washington Mutual was second with $84.8 billion; Chase Home Finance was third with $65.38 billion; Countrywide Financial was just behind, with $65 billion; and Bank of America was fifth with $30.69 billion.

The newsletter also estimates that in 2003 there was a total of $660 billion in jumbo loans, out of $3.76 trillion for the mortgage market as a whole. (A trillion is 1,000 billion.)

While most borrowers have fixed-rate mortgages, individuals who take out jumbo loans are much more likely to get adjustable-rate mortgages, in which the rates can change over time, depending on benchmark loan rates. And the financial requirements of the banks extending jumbo loans can rise with the size of the mortgage.

One attraction that applies to holders of both jumbo and conforming loans, however, perhaps especially at this time of year, is deductibility: interest payments are deductible from federal taxes, up to a limit of $1 million a year.

In an era of intense demand for high-end properties in some markets, stratospheric numbers are not as rare as they used to be. Six days ago, Dr. Stephen B. Colvin, the chief of cardiovascular surgery at New York University Medical School, and his wife, Helane, closed on a $2,535,000 loan from the New York Mortgage Company in Manhattan to refinance their condominium on East End Avenue at the corner of 82nd Street and gain funds to complete an extensive renovation. The 2,600-square-foot apartment has three bedrooms, three baths, a large eat-in kitchen, floors made of marble and rare woods and an assortment of other exceptional details.

When they bought the condominium about two years ago, Dr. Colvin said, the appraisal price was roughly $1.9 million and their mortgage from the Bank of New York was $1.5 million. But when the Colvins decided to undertake what the doctor described as "a massive construction project," they contacted New York Mortgage and received a second-mortgage "bridge loan" of $500,000 to begin the renovations.

Seeking to consolidate the loans and pay all the renovation costs, Dr. Colvin turned again to New York Mortgage. The company asked for two new appraisals. One put the value of the property at $3.9 million, the other at $4.2 million. New York Mortgage ended up lending $2,535,000. "So we locked into an adjustable rate mortgage that started at about 3.7 percent for 10 years, but would never go above 10.5 percent," Dr. Colvin said.

Not surprisingly, the details of loans at this level may be different from those for jumbo mortgages that are just above the ceiling of conventional mortgages. According to Neil Bader, the branch manager of Wells Fargo Private Mortgage Bank responsible for the New York area, "Jumbo loans over $333,700 don't necessarily require a larger down payment," than smaller loans.

Loans below $333,700 are usually underwritten to conform to the standards of Fannie Mae and Freddie Mac, the Congressionally chartered companies that purchase loans from banks and other originators, then package them with others and sell them to investors on what is called the secondary market.

The conforming loan limit used by Freddie Mac and Fannie Mae, explained David Broderer, a financial analyst with the Federal Housing Finance Board, which helps oversee the nation's mortgage system, is derived from an annual survey of actual house prices. These surveys, taken in October and released in November, chart the average home price associated with newly issued mortgages, which is compared with the average home price the previous October. The percentage change is calculated and Fannie Mae and Freddie Mac are responsible for using that percentage change to calculate the new conforming loan limit.

FOR mortgages conforming to the Fannie Mae and Freddie Mac standards, the down payment requirement is usually a minimum of 20 percent of the price of the home, and this standard often applies for loans in the low end of the jumbo category. "But as the loan amount increases," Mr. Bader said, so could the percentage down payment requirements. "At $500,000 it would ordinarily not require a larger down payment, but at $900,000 it might," Mr. Bader said. "It varies from financial institution to institution."

Another difference, Mr. Bader noted, can be in the requirements for a borrower's monthly cash flow. Fannie Mae and Freddie Mac's standards ordinarily require that after closing the mortgage, the borrowers have enough for two months of "PITI" payments — meaning principal, interest, taxes and insurance.

As loans soar past the jumbo threshold, the guidelines can be significantly more rigorous. For example, a home mortgage over $1 million could require post-closing liquidity — meaning cash and investments that can easily be sold— of more than 50 percent of the borrower's annual income.

One reason for the continuing demand for jumbo mortgages in the New York City area is that housing prices continue to soar. "House prices are so insane," said James C. Maloney, who together with his brother Christopher originates mortgage loans for J. P. Morgan Chase in Melville, N.Y. Last year the brothers originated about 120 jumbos, sometimes, he said, for surprising amounts. "For example," Mr. Maloney said, "I sold clients a $3.2 million mortgage in the Hamptons, to buy a property valued at $5.6 million, and they're going to demolish and spend $1.5 million on construction."

Super jumbos are concentrated where there are lots of people with lots of money. New York City and the Hamptons are obvious strongholds. In other parts of the country, San Francisco and nearby Marin County, Los Angeles, Miami, Chicago and Boston are markets with many super jumbo loans.

While many super jumbo borrowers are obviously very well off, high net worth does not necessarily mean corresponding cash flow. "Some people take larger loans," said Steven Schnall, the president and chief executive of the New York Mortgage Company, "because they don't have sufficient liquidity to pay all cash." Or sometimes, he added, they might have appreciated assets that they don't want to liquidate because they would have to pay capital gains tax.

Mr. Bader said that the rates on fixed-rate jumbo mortgages are often slightly higher than the prevailing rate for conventional mortgages — usually a quarter to one-half of one percent higher. This is a consequence of the more limited secondary market for such loans, unlike the easily securitized conforming loans bought, combined with others and then sold to investors by Fannie Mae and Freddie Mac.

While Fannie Mae and Freddie Mac do not, by definition, purchase jumbo loans from their originators, they do purchase a small number of adjustable-rate loans, known as ARM's. Such loans often have the same rate whether they are jumbos or conforming loans. That depends on market conditions.

Richard J. Russell, a mortgage broker and the president of Richland Equity Resources in Manhattan, said, "I always insist that the consumer taking out a loan of $400,000 or more be sure to choose an ARM." Those products, he added, are available with a wide spectrum of conditions: mortgages whose rate is adjustable monthly, at one extreme, or ARM's with an initial rate frozen for three, five, seven or 10 years. Such loans are typically amortized over 30 years, and once the initial period stops, the consumer may want to convert to a fixed rate loan or keep the adjustable if the rates are favorable at the time.

The conforming loan limit used by Freddie Mac and Fannie Mae, explained David Broderer, a financial analyst with the Federal Housing Finance Board, which helps oversee the nation's mortgage system, is derived from an annual survey of actual house prices. These surveys, taken in October and released in November, chart the average home price associated with newly issued mortgages, which is compared with the average home price the previous October. The percentage change is calculated and Fannie Mae and Freddie Mac are responsible for using that percentage change to calculate the new conforming loan limit.

FOR mortgages conforming to the Fannie Mae and Freddie Mac standards, the down payment requirement is usually a minimum of 20 percent of the price of the home, and this standard often applies for loans in the low end of the jumbo category. "But as the loan amount increases," Mr. Bader said, so could the percentage down payment requirements. "At $500,000 it would ordinarily not require a larger down payment, but at $900,000 it might," Mr. Bader said. "It varies from financial institution to institution."

Another difference, Mr. Bader noted, can be in the requirements for a borrower's monthly cash flow. Fannie Mae and Freddie Mac's standards ordinarily require that after closing the mortgage, the borrowers have enough for two months of "PITI" payments — meaning principal, interest, taxes and insurance.

As loans soar past the jumbo threshold, the guidelines can be significantly more rigorous. For example, a home mortgage over $1 million could require post-closing liquidity — meaning cash and investments that can easily be sold— of more than 50 percent of the borrower's annual income.

One reason for the continuing demand for jumbo mortgages in the New York City area is that housing prices continue to soar. "House prices are so insane," said James C. Maloney, who together with his brother Christopher originates mortgage loans for J. P. Morgan Chase in Melville, N.Y. Last year the brothers originated about 120 jumbos, sometimes, he said, for surprising amounts. "For example," Mr. Maloney said, "I sold clients a $3.2 million mortgage in the Hamptons, to buy a property valued at $5.6 million, and they're going to demolish and spend $1.5 million on construction."

Super jumbos are concentrated where there are lots of people with lots of money. New York City and the Hamptons are obvious strongholds. In other parts of the country, San Francisco and nearby Marin County, Los Angeles, Miami, Chicago and Boston are markets with many super jumbo loans.

While many super jumbo borrowers are obviously very well off, high net worth does not necessarily mean corresponding cash flow. "Some people take larger loans," said Steven Schnall, the president and chief executive of the New York Mortgage Company, "because they don't have sufficient liquidity to pay all cash." Or sometimes, he added, they might have appreciated assets that they don't want to liquidate because they would have to pay capital gains tax.

Mr. Bader said that the rates on fixed-rate jumbo mortgages are often slightly higher than the prevailing rate for conventional mortgages — usually a quarter to one-half of one percent higher. This is a consequence of the more limited secondary market for such loans, unlike the easily securitized conforming loans bought, combined with others and then sold to investors by Fannie Mae and Freddie Mac.

While Fannie Mae and Freddie Mac do not, by definition, purchase jumbo loans from their originators, they do purchase a small number of adjustable-rate loans, known as ARM's. Such loans often have the same rate whether they are jumbos or conforming loans. That depends on market conditions.

Richard J. Russell, a mortgage broker and the president of Richland Equity Resources in Manhattan, said, "I always insist that the consumer taking out a loan of $400,000 or more be sure to choose an ARM." Those products, he added, are available with a wide spectrum of conditions: mortgages whose rate is adjustable monthly, at one extreme, or ARM's with an initial rate frozen for three, five, seven or 10 years. Such loans are typically amortized over 30 years, and once the initial period stops, the consumer may want to convert to a fixed rate loan or keep the adjustable if the rates are favorable at the time.

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