Jumbo Loans Vs. Conforming Loans
The main difference between jumbo loans and conforming loans is the amount you are able to borrow. Conforming loans are limited to loan amounts set by the Federal Housing Finance Agency (FHFA), with the help of Freddie Mac and Fannie Mae. These loan amounts are referred to as conforming limits and change by area and year.
If you are looking for a loan above the FHFA conforming limit for an area, you will need to get a jumbo loan to borrow more than a typical conforming loan allows. Because of their large loan amounts, jumbo loans do tend to have stricter requirements than these conforming loans.
If you are hoping to buy a home over the conforming limit, apply for a jumbo loan today!
What’s the difference?
With larger loans amounts, jumbo loans tend to be seen as higher risk than conforming loans, and their requirements can be slightly tougher.
It is important to know that not all lenders are willing to issue jumbo loans due to their perceived risks.
Loan amounts and limits
The FHFA sets conforming loan limits based on the average price of a home in a particular year and county. Jumbo loans are loans with a value over any conforming limit.
As of 2025, the baseline conforming limit for a single-family home is $806,500. In high-cost areas, the conforming limit is $1,209,750.
You can check what your county’s conforming limit is on the U.S. Federal Housing website.
Credit score
Most lenders will look for borrowers to have credit scores of 620 for a conforming loan. Jumbo loans tend to have a higher credit score requirement than conforming loans as lenders view jumbo loans riskier. For loans up to $1 million, lenders tend to look for a credit score of 700. Any loan valued higher than $1 million usually needs a credit score of 740.
For either conforming or jumbo loans, the higher the credit score, the better chance you might have in securing a lower interest rate.
Debt to income ratio (DTI)
Your DTI will let lenders know how much of your monthly income is being used on previous debts. For most conforming loan, lenders typically look for a DTI of 43% or lower. When applying for a jumbo loan, most lenders want borrowers to have a maximum DTI of 40%.
Down payment
Down payment options can vary depending on the type of loan you get and your financial situation. Conforming loans have down payment options from 3% to 20%. Down payment options for jumbo loans tend to be higher, from 10% to 25%.
If you are looking for a 0% down payment option, VA loans and USDA loans are available for eligible borrowers. VA loans can come in the form of jumbo loans with 0% down payment options available.
Cash reserves
Lenders look for borrowers to have cash reserves equal to several months of mortgage payments when applying for a loan. Cash reserves ease lenders’ worries in the event that a borrower’s financial situation changes. When looking to get a conforming loan, lenders hope that a borrower has two to six months of monthly payments saved up. With jumbo loans, lenders may look for six to 12 months of monthly payments in cash reserves.
The exact amount may vary depending on your lender.
Jumbo vs conventional loan
A common misconception is that a jumbo loan is not a conventional loan. Jumbo loans are a type of conventional loan. Conventional loans are not government backed and made through private lenders. These loans can be conforming or nonconforming and come in fixed or variable interest rates.
Jumbo loan vs. conforming loan interest rates
Conforming loans tend to have lower mortgage interest rates compared to jumbo loans. A borrower’s credit score and down payment amount can influence the interest rates lenders are willing to offer. A higher credit score and down payment size can sometimes lead to lower interest rates as well.
In some cases when getting a jumbo loan, lenders may offer lower rates than others to attract borrowers.
Lower interest rates will mean spending less on your monthly mortgage.*
Jumbo loan or conforming loan: Which is right for you?
The right loan for you depends on the size of the loan you need and your financial situation. Talk with a lender to see what your loan options might look like.
Lenders can look at your needs and financial situation to help you decide whether a jumbo or conforming loan is best for your needs and situation.
Connect with a lender today to find out which loan is right for you!
*Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Contact Rate for current rates. Restrictions apply.
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