Jumbo Loans
A jumbo loan is a mortgage used to finance properties that are too expensive for a conventional conforming loan. The maximum amount for a conforming loan is $766,550 in most counties, as determined by the Federal Housing Finance Agency (FHFA). Homes that exceed the local conforming loan limit require a jumbo loan. Also called non-conforming conventional mortgages, jumbo loans are considered riskier for lenders because these loans can't be guaranteed by Fannie and Freddie, meaning the lender is not protected from losses if a borrower defaults. Jumbo loans are typically available with either a fixed interest rate or an adjustable rate, and they come with a variety of terms.
Advantages
• Higher loan limits for luxury or
high-cost homes
• Competitive interest rates
• Low down payment options
• No PMI on many programs
• Flexible terms (fixed or adjustable)
• Stronger purchasing power
Downpayment Requirements
Jumbo loan down payments vary by lender, but here’s what most borrowers can expect:
• 10%–20% Down (Most Common)
Most jumbo programs fall in this range, especially for borrowers with strong credit, solid income, and good reserves.
• 20%–30% Down (Higher-Risk Scenarios)
If the borrower has lower credit, a higher DTI, or is buying a non-warrantable condo, second home, or investment property, lenders may require a larger down payment.
• 5%–10% Down (Special Programs)
Some lenders offer reduced down payment jumbo loans for well-qualified borrowers with excellent financial profiles.
• Reserves May Be Required
Unlike conventional loans, jumbo loans often require several months of cash reserves to qualify.
Eligibility Requirements
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Credit Score: Usually 700+, often 720+ for best rates
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Debt-to-Income (DTI): Typically ≤43%
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Cash Reserves: 6–12 months of housing costs
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Income & Employment: Stable, well-documented income (2+ years)
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Down Payment: Usually 10–20% of purchase price
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Property & Documentation: Full appraisal, tax returns, pay stubs, bank statements
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Underwriting: Often manual review by an underwriter
CLOSING COSTS
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Typical range: 2%–5% of loan amount
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Common fees: Origination (0.5–1%), appraisal ($500–$1,500+), title & recording, underwriting/processing
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Optional points: 1 point = 1% of loan to lower interest rate
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Prepaids: Taxes, insurance, interest
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Jumbo loan closing costs are usually higher than conventional loans due to larger loan size
Jumbo Loans FAQ's
What are the rates like
for Jumbo Loans?
Typically comparable to traditional loans for borrowers have good credit. - Can differ depending on the lender and the type of.
Are there special requirements for Jumbo Loans?
Jumbo loans typically go through a manual underwriting process. Lenders may for additional documentation because of larger loan amounts.
Who Should Consider a
Jumbo Loan?
Buyers in expensive housing markets- Individuals acquiring luxury, spacious, or investment. Borrowers with robust financial backgrounds.
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