Jumbo loan: Definition, rates, and how to qualify

For those who live in high-cost areas or have large homebuying budgets, a regular conforming mortgage might not cut it. 

If you need an especially large loan, you'll likely need to find a mortgage lender that offers jumbo mortgages. These mortgages are a little trickier to qualify for, but they come with the benefit of larger loan amounts — often up to $2 or $3 million. Plus, jumbo mortgage rates are often on par with conforming rates.

What is a jumbo loan?

Jumbo loan definition

A jumbo loan is a type of mortgage that surpasses the conforming loan limit set by the Federal Housing Finance Agency (FHFA). 

How jumbo loans work

Jumbo loans work similarly to regular mortgages, but they typically come with more stringent credit requirements. These requirements can vary from lender to lender depending on which investors they sell their loans to after closing.

Jumbo loans are a type of non-conforming loan, which means they can't be sold to Fannie Mae or Freddie Mac, two of the largest mortgage investors.

Who are jumbo loans for?

If you're buying a more expensive home or you live in an area with a lot of high-value real estate, you might need a jumbo loan to be able to complete your purchase. Jumbo loans can be used for primary residences, second homes, and investment properties.

Jumbo loan limit 2025

The FHFA sets the limit for conforming loans annually. In 2025, the conforming loan limit is $806,500 in most parts of the U.S. In areas with a higher cost of living, the limit goes up to a ceiling of $1,209.750.

Jumbo loans are for amounts that exceed this limit.

For example, in Los Angeles County, the conforming loan limit for a one-unit property is $1,209,750 in 2025. If you need a mortgage for more than this, you'll have to get a jumbo loan.

Conforming loan limits go higher if you're purchasing a two, three, or four-unit property.

Jumbo loan requirements

A jumbo loan can help you afford a higher-cost home, but there are some factors to take into consideration before you apply. Each lender has different qualifications for receiving a jumbo loan, but here are some general guidelines you can expect:

You'll usually need to put at least 10% or 20% down

Many mortgage lenders accept down payments as low as 3% for conforming loans. But for a jumbo loan, many lenders require at least 20% upfront.

Don't throw in the towel if you know you don't have 20% handy. Better Mortgage, for example, only requires a 10.01% down payment. And though it's less common, you may be able to find a jumbo lender that will accept a down payment of just 5%.

You'll need a good credit score

You'll need a higher credit score to qualify for a jumbo loan than you would for a conforming loan — often at least 700, though individual lenders may have minimum score requirements that are higher or lower than this. The higher your score, the better rate you'll get.

You'll need a lower debt-to-income ratio

Your debt-to-income ratio is the monthly amount you pay toward debts divided by your gross monthly income. For example, if you spend $2,000 a month on your mortgage and student loan payments, and you earn $3,000 a month, your debt-to-income ratio is $2,000 divided by $3,000, or 66%.

For a lot of jumbo loan lenders, a DTI of 45% is the highest you can go. And some may require ratios that are lower than this.

You may need cash reserves in the bank to prove you can cover your payments

Many lenders want to see that you have enough money in your savings to cover a few months of mortgage payments if you were to unexpectedly lose your source of income. This money is referred to as your cash reserves.

How much you'll need can vary depending on your lender and the level of risk it would be taking on with your loan, but it's generally a good idea to plan to have six to 12 months' worth of mortgage payments set aside.

This cash may need to be in a more liquid form, such as in a checking or savings account, though your lender may also include sources like retirement or brokerage accounts when calculating your reserves.

Best jumbo mortgage rates

Mortgage rates have been somewhat high recently. In April, 30-year conventional rates averaged 6.71% overall for the month, according to Zillow data — up 26 basis points from the month before.

Mortgage rates are forecast to go down slightly this year, but because there's so much uncertainty in the economy right now, that could change. Tariffs are expected to both slow economic growth and raise inflation, which makes it hard to say whether rates will ultimately go down or if they could increase this year.

Are jumbo loan interest rates higher?

You might think that the rate on a jumbo mortgage will always be higher than a conforming mortgage rate, but that's not necessarily the case. After checking with several sources and lenders, we found that many lenders offer jumbo rates that are comparable to or even lower than conforming rates.

However, even if you can get a jumbo loan with a low rate, keep in mind that the more money you borrow, the larger your monthly mortgage payment will be and the more you'll ultimately spend on interest. 

How to get the best jumbo mortgage rate

To get the best rate on your jumbo mortgage, get quotes from a few different lenders to compare offers. Not every lender offers the same rates, so shopping around gives you a chance to see what's available and ensure you're getting the best overall deal.

Pros and cons of jumbo loans

Pros

• Borrow more: Larger loan amounts let you purchase higher-value homes
• Competitive rates: Jumbo loan rates are often comparable to or better than conforming loan rates
• Flexibility: There are many different types of jumbo loans out there, including ARMs and interest-only mortgages
• No PMI: Many jumbo loan lenders don't require private mortgage insurance on their loans, even if you put down less than 20%

Cons

• Credit needs to be good: You'll need to have a strong credit score and a low DTI to qualify for a jumbo loan
• Higher down payments: Getting enough cash to put 10% or more down on a high-value home purchase can be challenging
• More costs: You may pay more in closing costs with a jumbo loan
• Reserve requirements: Your lender may require you to keep a certain amount of cash in the bank to qualify

Finding the best jumbo loan lenders

Every jumbo loan lender is different, so shopping around not only ensures you get a good rate, but it also can help you find a lender that has features you like, too. The best mortgage lenders offer great customer service, streamlined online applications, and robust digital tools to get you to closing smoothly.

If you're having trouble, you might want to work with a mortgage broker who can do the shopping around for you.

Jumbo loan FAQs