Jumbo Loan Guide
A jumbo loan finances an amount above the conforming loan limit set for conventional loans, which is common in higher-cost housing markets or for larger properties. Because jumbo loans aren't eligible for purchase by Fannie Mae or Freddie Mac, lenders typically apply stricter underwriting standards.
Who It Tends to Fit
Jumbo loans fit buyers purchasing higher-priced homes that exceed the conforming loan limit for their county, who also have strong credit, income, and reserves to support the larger loan amount.
Key Features
- Loan amounts above the conforming limit, which varies by county and is updated periodically
- Often requires a larger down payment than conforming loans, commonly in the range of 10-20% or more
- Interest rates can be higher or lower than conforming loans depending on market conditions and lender
- Available in fixed-rate and adjustable-rate structures
General Qualifying Factors
- Strong credit, often well above the minimums accepted for conventional loans
- A lower debt-to-income ratio than many conforming programs require
- Significant cash reserves — sometimes six months or more of payments — are commonly required
- Full income and asset documentation, with extra scrutiny for self-employed borrowers
Exact requirements vary by lender and can change over time, so treat the figures above as general starting points rather than guarantees. A licensed loan officer can confirm current guidelines for a specific program.
Costs to Expect
Because jumbo loans involve larger amounts, closing costs (typically calculated as a percentage of the loan) tend to be higher in dollar terms even when the percentage itself is similar to a conforming loan.
Also Worth Knowing
Loan limits are set annually and vary by county, so a loan that's 'jumbo' in one area may be a standard conforming loan in a higher-cost county.