What is a Jumbo Loan?
If you live in an area with a high cost of living, or you’re in the market for an expensive home, you may need a jumbo loan to finance your purchase. Jumbo loans are mortgages with loan amounts that exceed local conforming loan limits.
Before you apply for a jumbo loan, though, make sure you can meet the more stringent minimum credit score and down payment requirements. Here’s what to consider as you start your home search.
What is considered a jumbo loan?
A “jumbo loan” refers to any conventional mortgage larger than the conforming loan limits set by the Federal Housing Finance Agency (FHFA) each year. In 2025, single-family mortgages with balances higher than $806,500 in most U.S. counties (and $1,209,750 in certain high-cost areas) are considered jumbo loans.
Since some real estate markets are more expensive than others, conforming loan limits vary by county. When you’re ready to buy a home, your loan limit is determined by the county in which you intend to purchase the property.
Jumbo loans vs. conforming loans
Here’s how jumbo loans differ from standard mortgages:
Bigger down payment
While it’s possible to find jumbo loan lenders that will accept a 10% down payment, most will require you to put down at least 20%. That’s a lot more than you’ll need for a conforming loan, which usually only requires a down payment between 3% to 5% of the home’s purchase price.
Higher fees
Since the principal balance is higher than usual on a jumbo loan, any fees that are expressed as a percentage of the loan balance, such as closing costs and origination fees, will be higher as well.
Higher interest rates
In today’s market, jumbo mortgage rates are likely to be higher than conforming loan rates. Still, interest rates can vary widely (depending on your lender and the strength of your financial profile), so it’s a good idea to shop around as you apply for a home loan.
3 tips to save on jumbo loan interest rates
- Build your credit score: Since the lowest interest rates are typically given to those with the highest credit scores, work to boost your credit score as much as possible by paying more than the minimum on your monthly debt and making on-time payments every time.
- Make a larger down payment: If you can save enough to make a larger down payment, lowering your loan-to-value (LTV) ratio may help you secure a lower interest rate.
- Shop around for a loan: You’ll want to get jumbo rate quotes from at least three mortgage lenders before applying for a loan.
Learn more about how to shop for mortgage rate offers.
Jumbo loan requirements
Jumbo loan requirements tend to be more stringent than the ones for conforming loans. This is what you can expect lenders to use to determine your eligibility for a jumbo loan:
- Minimum credit score: 700
- Minimum down payment: 20%
- Maximum debt-to-income (DTI) ratio: 45%
- Cash reserves for future mortgage payments
- Higher closing costs
- Appraisal required
- Manual underwriting
700+ credit score
A jumbo loan may require a minimum 700 credit score, which is significantly higher than the minimum required for conventional or government-backed loans. That said, it isn’t impossibly high, and is considered only a “good” credit score — you won’t have to reach as high as a “very good” or “exceptional” score to get a jumbo loan.
Don’t know your credit score? Get your free score on LendingTree Spring today.
20% down payment
Although it’s possible to find lenders with lower down payment requirements, it’s a good idea to prepare to make a 20% down payment toward your home purchase. Many jumbo lenders may even require more.
At the bottom end of jumbo loans, this would amount to a required $161,300 down payment, but rises with higher loan amounts. Jumbo loans can go as high as $1 million to $2 million, according to the Consumer Finance Protection Bureau (CFPB). In that case, a minimum down payment would end up in the $200,000 to $400,000 range.
45% debt-to-income (DTI) ratio
Your DTI ratio is a measure of your total monthly debt divided by your gross monthly income. It helps lenders understand whether you can comfortably handle taking on more debt.
A maximum 45% DTI ratio is common for jumbo loans. Although you may have a high income, if you also carry a lot of debt, you may have trouble qualifying for a jumbo loan.
Cash savings to cover several months of mortgage payments
You’ll likely be required to show that you have several months or years of cash reserves on hand to safeguard against unexpected expenses or other financial speedbumps. The term “cash reserves” refers to the amount of money you have in savings, and is calculated as the number of monthly mortgage payments you’d be able to cover.
The exact amount required for cash reserves varies by lender and may change based on your credit score, DTI ratio, the type of property you’re financing and how many homes you have financed. It’s reasonable to expect that jumbo lenders will want to see proof of six to 24 months of cash (or liquid assets) in your bank account.
Closing costs
Closing costs for jumbo loans can be higher than for conventional or government-backed loans — especially in the case of nonqualifying jumbo mortgage lenders, which aren’t limited in how much they can charge in upfront fees by either the CFPB’s or Fannie’s and Freddie’s rules.
Appraisals
Some lenders may require that you get two home appraisals to verify the value of the home you intend to purchase.
Manual underwriting to decide if you qualify
Most jumbo loans are manually underwritten, which means that — unlike the bulk of conventional or government-backed loans — they aren’t fed into a computer program that decides whether you qualify for the loan. Instead, an actual human (called an underwriter) evaluates your financial picture and your ability to pay back the loan.
Pros and cons of a jumbo mortgage
| Pros | Cons |
|---|---|
You can borrow above the conforming loan limit. You can get a fixed- or adjustable-rate loan. You can avoid private mortgage insurance (PMI) if you make at least a 20% down payment. You can use your VA loan benefit with a jumbo purchase. | You'll typically need at least a 20% down payment. You'll need to have a significant sum in cash reserves. You’ll probably have a higher interest rate than you'd have on a conforming loan. You may be taking on a more risky loan, as jumbo loans have fewer consumer protections. You may not save as much as you may hope at tax time, since the mortgage interest deduction doesn't offer a higher limit for jumbo loans. |
Jumbo loans normally aren't offered for government loans
Government loan programs typically don’t offer jumbo loans. There is, however, one exception: VA loans backed by the U.S. Department of Veterans Affairs (VA). For qualifying military borrowers with full entitlement, there’s no loan limit on VA home loans.
Is a jumbo loan right for me?
If home values in your area exceed the area’s conforming loan limits, or you’re shopping for a luxury home, a jumbo loan may be your only option when it comes to financing your home purchase.
Still, jumbo loans are generally meant for borrowers with strong financial profiles. You’ll need a good credit score, a low DTI ratio and plenty of savings to qualify. If you feel like meeting these requirements will be too much of a stretch financially, taking out a larger-than-normal loan may not make sense.
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