Jumbo loans: getting the keys to your forever home
If you’ve outgrown your starter home, are looking to buy in an area with high-value homes or simply want to upgrade to a bigger place, a jumbo loan can help you afford a whole lot of house.
Jumbo loans are just what they sound like: a loan larger than a traditional mortgage that can help you afford a home of higher value. And jumbo loans aren’t as difficult to get as they used to be.
Are you ready to explore how a jumbo loan could help get you into that dream home? Apply now!
What is a jumbo loan?
The Federal Housing Finance Agency (FHFA) sets borrowing limits for conventional mortgages in the U.S.
Conforming loans stay within those limits. A jumbo loan is considered nonconforming because it allows a loan amount above FHFA limits.
For buyers in areas with high-value properties, a jumbo loan could provide additional pathways to homeownership in today's competitive markets.
How does a jumbo loan work?
Jumbo loans in the past required higher down payments options and came with higher interest rates. But increased demand and a strong investor market have lowered interest rates, and some lenders now offer jumbo financing options for as little as 10% down.
Because lenders take on more risk when they fund a jumbo loan, many also require significant savings, typically six to 12 months of reserves depending on the loan amount and credit score. A reserve is equivalent to one mortgage payment, including taxes, insurance and homeowners association fees.
Jumbo loan limits
The 2025 FHFA conforming loan limit is $806,500 in most areas. But in some parts of the country, such as California, Hawaii and Alaska, property values are so steep that borrowing limits are set at $1,209,750.
If you seek financing that exceeds these limits, you’ll be in the market for a nonconforming loan. These jumbo loans have limits, too, but limits will vary. Lenders usually set their own jumbo limits, and each loan product has qualification requirements to ensure the borrower can make the payments.
You can check loan limits on the or through a mortgage lender.
Jumbo loan interest rates
Jumbo loan interest rates are usually a bit higher than for conforming loans, partly due to the added risk lenders face.
Mortgage interest rates for jumbo loans are influenced by credit scores, and the borrower’s , which helps lenders assess the borrower’s financial stability.
Rate’s also take into account the property type and location, as well as market conditions and other factors.
Requirements for jumbo loans
Borrowers interested in a jumbo loan typically will need a credit score in the range of 700 and a debt-to-income (DTI) ratio about 43% or lower.
Lenders also will look for proof of a steady income and cash reserves to ensure borrowers can afford to make the monthly payments.
Although a 20% down payment option is common, some lenders offer options for less. For example, Rate offers jumbo loans with lower down payment options depending on borrower qualifications.
Pros and cons of jumbo loans
Pros
Jumbo loans could offer a pathway to homeownership for borrowers seeking financing for properties in high-value areas such as New York, California and Hawaii. A larger loan could also help potential homeowners planning to upgrade to a larger home to accommodate an expanding family. You can even use jumbo loans for investment homes and multiunit properties.
Cons
Because of the increased risk lenders assume with larger loans like a jumbo, requirements for borrowers are tougher. You’ll need a higher credit score and lower DTI ratio. Jumbo loans also could come with higher mortgage interest rates and generally higher down payment options.
How to get a jumbo loan
Applying for a jumbo loan is simple with Rate’s . Follow these steps.
- Review your finances: Check your credit score, income, DTI ratio and cash on hand for a down payment.
- Gather key documents: You’ll need to provide income verification, tax returns, asset statements and personal identification.
- Apply online: Once you submit your application, your Loan Officer will help you from there.
If you are ready to explore how a jumbo loan could help get you into that dream home, apply now!
Guaranteed Rate, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture, or any other government agency.
