Jumbo Loan

A jumbo loan is a mortgage that exceeds the conforming loan limit set annually by the Federal Housing Finance Agency (FHFA). When a loan amount goes above that limit, Fannie Mae and Freddie Mac cannot buy it from the lender. That makes it a non-conforming loan, and the lender either holds it on its own books or sells it into the private secondary market. For 2026, the conforming loan limit is $832,750 in most US counties and up to $1,249,125 in high-cost areas including parts of California, New York, Hawaii, and Alaska.

Any single-family mortgage above your county's applicable limit qualifies as a jumbo loan, regardless of what you call it or where you apply.

Why the Conforming Limit Defines the Line

Fannie Mae and Freddie Mac are restricted by law to purchasing mortgages within the FHFA-established limits. These government-sponsored enterprises buy conforming loans from lenders, freeing lenders to originate new loans. Because jumbo loans fall outside those limits, lenders bear the full credit risk themselves unless they can sell to private investors.

That extra risk is why jumbo loans come with stricter underwriting requirements. A larger loan means a larger potential loss if the borrower defaults.

Jumbo Loan Qualification Requirements Are Tougher Across the Board

You need to meet higher standards for a jumbo loan compared to a conforming mortgage. Lenders typically look for the following:

• Credit score: Most lenders require at least 700, and some prefer 720 or higher. Standard conforming loans accept scores down to 620.
• Down payment: Typically 20% or more, though some lenders accept 10% for well-qualified borrowers. No private mortgage insurance is required when you put down 20%.
• Debt-to-income ratio: Most lenders cap this at 43%, compared to up to 50% for conforming loans.
• Cash reserves: Lenders commonly require six to twelve months of mortgage payments held in liquid accounts after closing.
• Documentation: Expect more thorough income verification, including multiple years of tax returns and detailed asset statements.

Jumbo Loan Rates Have Converged With Conforming Rates

Historically, jumbo loans carried higher interest rates than conforming mortgages because of the added risk. In recent years that gap has narrowed, and in some circumstances jumbo rates are lower than conforming rates. This happens because jumbo borrowers tend to have strong credit profiles, large asset bases, and low default rates, which reduces the effective risk to lenders.

As of late 2025, the average 30-year fixed jumbo rate was approximately 6.50%, about 0.16 percentage points above comparable conforming rates.

A Loan Can Stop Being Jumbo If You Refinance

If your jumbo loan balance eventually falls below your county's conforming limit, you can refinance into a standard conforming mortgage. That refinance typically brings lower rates and less stringent ongoing requirements. Many jumbo borrowers plan for this from the start, making extra principal payments to cross below the threshold faster.

Sources

• Federal Housing Finance Agency – Conforming Loan Limits – https://www.fhfa.gov/data/conforming-loan-limit
• Rocket Mortgage – https://www.rocketmortgage.com/learn/jumbo-loan-limits
• Bankrate – https://www.bankrate.com/mortgages/jumbo-vs-conventional-loans/
• Wells Fargo – https://www.wellsfargo.com/mortgage/learn/what-is-a-jumbo-loan/
• Freedom Mortgage – https://www.freedommortgage.com/learn/mortgages/jumbo-loans