Loan amounts for luxury homes can range from the mid $500,000 to $25,000,000 dollars or more. The higher the loan amount, the lesser the pool of available lending institutions.

Luxury home loans facilitate the high-end purchase of expensive homes, vacation homes, investment property. They are quite attractive for primary occupants or investors who want to leverage their assets.

Usually you can expect to pay a higher interest rate on a high end home or a luxury home. As you are borrowing more money the risk becomes greater to the lender that is lending the money. If you were to borrow 15 million dollars to buy a home worth 20 million there is still a lot of risk involved to the lender even though you have put a 5 million dollar down payment down. As the loan and homes get more expensive, the percentage of consumers that can afford a home that expensive decreases substantially which could make it harder for a lender to resell in the event a default on the loan.

Lower interest rates in recent years have made luxury homes an attractive investment. Strong appreciation has encouraged borrowers to take on larger loan sizes.

For the year 2006, the conventional loan limit for one-unit properties is $417,000. Any single loan larger than that amount is considered a jumbo loan, and will have a higher interest rate.