What Is a Jumbo Loan?

Any loan that exceeds a county’s conforming loan limit is considered a jumbo loan. Each year, the Federal Housing Financial Agency (FHFA) sets new conforming loan limits, which means what qualifies as a jumbo loan will change with it. 

Conforming loan limits are the maximum a borrower can receive with a conventional loan. These limits vary based on the cost of living where you are looking to buy a home. As of 2025, baseline conforming loan limits reach up to $806,500, and conforming loan limits in high-cost areas reach up to $1,209,750. Any home loans above these amounts will be jumbo loans. 

If you are looking for a home loan higher than your conforming limit, apply for a jumbo loan today! 

How do jumbo loans work? 

Jumbo loans work similar to most other loans, though not all lenders offer jumbo loans. 

Depending on your needs, your jumbo loan can be an adjustable- or fixed-rate mortgage with several options when it comes to loan term length. Jumbo loans are available to military service members as a jumbo VA loan or FHA-approved borrowers as a jumbo FHA loan. 

Jumbo loan requirements 

Lenders take on significant risk when issuing these loans. To help offset the risk of these larger loans, lenders have stricter criteria for jumbo loans than they do for conforming loans. 

Lenders decide their own requirements a borrower must meet to be eligible for a jumbo loan. A few typical qualifications for jumbo loans that you may see are: 

• A credit score of 700 or above. 

• Lenders tend to look for a maximum 43% debt-to-income (DTI) ratio. 

• Down payments options of at least 10% are usually required, though some lenders will require 20%. 

• Lenders often will check to see if borrowers have cash on hand to cover a portion of mortgage payments. 

• You may be required to get more than one home appraisal to ensure the amount a borrower needs is worth it. 

Pros and cons of jumbo loans 

Like any other loans, jumbo loans come with their own set of advantages and disadvantages depending on your situation. 

Pros 

Some pros of getting a jumbo loan are the potential for lower interest rates, the ability to borrow more money and access to multiple loan options.  

• Some lenders are willing to offer lower interest rates on jumbo loans to gain clients.  

• Borrowing more money allows you to purchase a home in a high-cost area without the need for a bigger down payment that conforming loans could require for the property.  

• Jumbo loans also come with many loan options based on a borrowers’ financial situation and needs. 

Cons 

A few cons when it comes to jumbo loans are higher closing costs, larger down payments and potentially being harder to qualify for.  

• Since these loans are bigger, you can expect higher closing costs calculated as a percentage of the loan amount.  

• Jumbo loans also tend to require at least a 10% down payment options, which is greater than most conforming loans.  

• Not all lenders offer jumbo loans, and those that do will have stricter qualifications you must meet. 

How much is a jumbo loan? 

The amount of your jumbo loan will depend on the conforming loan limit for the year and where you are looking to buy a home. The conforming loan limit is changed each year to match increases in home prices. High-cost areas in the U.S. do have larger conforming limits. Borrowing anything over the conforming limit will have to be with a jumbo loan. 

Jumbo loan costs 

You might notice that interest payments, down payments and closing costs are higher for jumbo loans than they are for conforming loans, as they are determined by the loan amount, which will be larger. Some lenders are willing to compete when it comes to interest rates on your jumbo loan to get your business.  

On top of that, your lender might require a sizeable cash reserve to ease the concern that you might not be able to make your monthly payments. 

How to lower your jumbo loan payments 

To potentially lower your monthly payments, whether you are looking for a jumbo or conforming loan, you will want to check and improve your financial situation before applying.  

Increasing your credit score and down payment amount could help you lower your monthly jumbo loan payments. A higher credit score could result in lower interest rates, which could lead to significant savings over the life of your loan. A larger down payment means that you won’t need to borrow as much and could pay less each month. 

Talk with a lender about your financial situation to find the best options when you apply for a jumbo loan.  

_{Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.} 

_{Owning 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 Nevada Department of Veterans Services, the US Department of Agriculture, or any other government agency. No compensation can be received for advising or assisting another person with a matter relating to veterans’ benefits except as authorized under Title 38 of the United States Code.}