How to Qualify for a Jumbo Loan

By Alene Laney · May 11, 2023 · 6 minute read

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How to Qualify for a Jumbo Loan

A jumbo loan is a mortgage that is larger than the loan-servicing limits set by the Federal Housing Finance Agency (FHFA). If you know you need a large loan to cover a higher home mortgage loan, you might be wondering how to qualify for a jumbo loan.

Jumbo loan qualifications are more stringent than conforming conventional loans. Because a jumbo loan is a nonconforming loan, banks take on more risk as they are not able to sell the loan to government-sponsored enterprises Fannie Mae and Freddie Mac. Since the loans are not guaranteed by the government, lenders are more cautious about the type of borrowers they do business with.

What this means for your money: You need conditions to be pretty optimal to qualify for a jumbo loan. But it can be done. Learn more here, including:

•   How to qualify for a jumbo loan

•   What factors lenders consider for jumbo loans

•   The jumbo loan qualification process

•   How to decide if a jumbo loan is right for you

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Jumbo Mortgage Requirements

The current limits for jumbo loans are defined as exceeding $726,200 for single-family homes, except in Alaska, Hawaii, and some federally designated markets that are considered high-cost. In those areas, the limit that’s exceeded is $1,089,300 since these locations tend to have pricier housing markets.

Jumbo mortgage requirements are similar to conventional conforming loan requirements, but there are some key differences that make them harder to qualify for.

A High Credit Score

Experts recommend a credit score of 700 or above for jumbo loan borrowers. A higher credit score when buying a house is indicative of a borrower’s behavior with credit and how likely they are to repay the loan. A higher credit score is needed for the higher loan amounts of a jumbo loan. That lofty score can help the lender feel more secure that you’ll pay back the amount you borrow.

Cash Reserves

A cash reserve is how much liquid money you have at your disposal. What counts as liquid money can vary from lender to lender. For example, some will allow a percentage of vested 401(k) funds to count toward the reserve requirement. Others do not.

Because jumbo loans are so large, lenders look for cash reserves in your account to guard against default. For the best jumbo loan terms, lenders can require as much as 12 months of reserves.

A Low Debt-to-Income Ratio

A debt-to-income ratio is the amount of income you make relative to the amount of debt obligations you have. If you have what is considered too much debt, the lender will not offer a loan to you. With jumbo loans, a healthy DTI ratio is essential to qualify for the mortgage. A DTI ratio below 43% is recommended or possibly a lower figure.

What Does the Jumbo Qualification Process Include?

When you’re looking at jumbo loan requirements and the qualification process, there are some things you should keep in mind. Here, what’s needed to get a mortgage:

Documents Required for Jumbo Loan

When you apply for a jumbo loan, the lender will look to verify the information you provided. Some documents you may be required to provide include:

•   Two years of tax returns

•   Profit & Loss (P&L) statement if you’re a business owner

•   Pay stubs

•   Bank statements

•   Documentation for other income

Loan-to-Value Ratio Evaluation

In addition to your application, the jumbo loan will require an appraisal of your property to ensure they’re not lending too much on the home (that is, more than it’s worth). This appraisal will ensure the home’s price is not too high and determine that the loan-to-value ratio (LTV) is within its guidelines.

Evaluating How Jumbo Down Payments Will Impact You

How much you put down on the home of your dreams will impact what loan you qualify for. If you’re able to put down enough, you may be able to forgo the jumbo loan requirements and get into a conforming conventional loan.

Is a Jumbo Mortgage Right for You? Questions To Ask

When it comes to making a decision on a jumbo loan, it’s helpful to ask yourself some questions that can help determine if a jumbo loan will work for you.

Do I Have Good Credit?

Ask yourself if your credit is strong enough to qualify for a jumbo loan. These mortgages do come with higher loan amounts and higher payments, and a good credit score range (over 700 typically) can help you get the best terms possible to qualify for a jumbo loan.

Do I Have a Low DTI and High Cash Reserves?

It’s important to have a low debt-to-income ratio and ample reserves to qualify for a jumbo mortgage, as discussed above. While some lenders may go up to as high as a 43% DTI, others will want to see a lower number.

Can I Prove I’m in Good Financial Health?

Qualifying for a jumbo mortgage goes beyond the numbers. Can you demonstrate to the lender that you’re able to continue making payments? Do you have a consistent job history? Are all the other financial factors in your life lined up so you can afford the mortgage?

Is the Property Value High Enough for a Jumbo Loan?

The jumbo loan value minimum (and conforming loan limits) is $726,200 for most areas in the U.S. If your mortgage is below this amount, you’ll want to look at financing with a conforming conventional loan instead. In high-cost areas, the home would have to hold a value of more than $1,089,300.

Do I Have Enough Money Saved?

A down payment on a property that merits a jumbo loan will often be a significant amount of cash. And while some closing costs are a flat fee that won’t go up, many are labor-intensive or percentage-based (3% to 6% of the loan amount), so your jumbo loan closing costs are larger than for a conventional, conforming loan.

Recommended: 18 Mortgage Questions for Your Lender

The Takeaway

If you are in the market for a high-value home, a jumbo mortgage can help you make it your own. However, you will need to meet the loan requirements, which may be somewhat more demanding than those for a conforming loan. By focusing on optimizing your credentials and financial profile, you can work to secure the mortgage that makes your home-ownership dreams come true.

When you’re ready to take the next step, consider what SoFi home loans have to offer. Jumbo loans are offered with competitive interest rates, with no PMI, and down payments as low as 10%.

SoFi Mortgage Loans: We make the home loan process smart and simple.


Is it harder to qualify for a jumbo loan?

Yes, jumbo loans are harder to qualify for. You will need a larger down payment than you would with a conforming loan, a higher credit score, a low debt-to-income ratio, more cash reserves, and a tighter loan-to-value ratio.

What credit score do you need for a jumbo loan?

For a jumbo loan, you may want to aim for a credit score above 700.

Do jumbo loans require a 20% down payment?

It is possible to obtain a jumbo loan with a down payment as low as 10% or possibly even lower.

Photo credit: iStock/lovenimo

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