Jumbo Loans

A jumbo loan is a mortgage that exceeds the conforming loan limits set annually by the Federal Housing Finance Agency (FHFA). For 2025, the conforming limit is $806,500 for a single-family home in most U.S. counties. Any mortgage above that threshold is a "jumbo" loan.

Because jumbo loans cannot be purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac, lenders hold them on their own balance sheets or sell them to private investors. This means lenders take on more risk and require stricter qualifying criteria to ensure borrowers can handle the larger debt load.

Jumbo loans are available as fixed-rate or adjustable-rate products. In some high-cost metro areas — New York, San Francisco, Los Angeles, Seattle, Miami — the median home price far exceeds the conforming limit, making jumbo loans a standard part of the market rather than an exotic product.

Jumbo loans have stricter eligibility requirements than conforming loans because lenders bear the full risk of default:

• Credit score: Most lenders require 700–720 at minimum; the best rates come with 740–760+. A single missed payment or collection account in recent years can disqualify you or significantly raise your rate.
• Income documentation: Two years of W-2s and federal tax returns. Self-employed borrowers need two years of business and personal returns showing stable or growing income. Income consistency matters more than one high-income year.
• Debt-to-income ratio: Generally 43% or below; many lenders cap at 38%–40% for the largest loan sizes. Lower DTI gives you the most options.
• Cash reserves: Typically 12–24 months of PITI (principal, interest, taxes, insurance) in liquid or near-liquid accounts after closing. Some lenders require more for very large loans.
• Property types: Single-family homes, condos, second homes, and investment properties all qualify, but investment properties face stricter requirements and higher rates.

Down payment expectations for jumbo loans are higher than for conforming loans:

• Typical minimum: 10%–20% down. Some lenders offer jumbo products with 10% down for highly qualified borrowers, but 20% is the most common minimum, especially for larger loan amounts.
• PMI with less than 20% down: Unlike conforming loans, not all jumbo lenders offer PMI — some simply require 20% down. Those that do allow PMI may charge a premium, or offer a higher-rate "no PMI" product instead.
• Gift funds: Some lenders allow gift funds for jumbo down payments; others require all funds to come from the borrower's own accounts. Verify this with your lender early in the process.
• Rate impact of down payment: On a jumbo loan, going from 10% to 20% down can meaningfully improve your interest rate, especially at loan amounts over $1.5M.

Jumbo loan fee structures differ from conforming loans in a few key ways:

• No government guarantee fees: Jumbo loans don't have FHFA delivery fees (LLPAs) that Fannie/Freddie charge on conforming loans. For borrowers with excellent credit and large down payments, this can actually make jumbo rates competitive.
• PMI: If required (below 20% down), PMI rates on jumbo loans are typically higher than on conforming loans — sometimes 0.5%–1.5% per year on a much larger balance.
• Closing costs: 2–5% of the loan amount, but on a $1.5M loan that's $30,000–$75,000. Itemize carefully and compare across lenders. Origination fees can vary significantly for jumbo products.
• Appraisal: Often requires two appraisals for very high-value properties, or a desk review in addition to a full appraisal. Budget $1,000–$2,000+ for appraisal costs.