What Is a Jumbo Loan & When Should You Get One?
A jumbo loan is a home mortgage loan that exceeds maximum dollar limits set by the Federal Housing Finance Agency (FHFA). Loans that fall within the limits are called conforming loans. Loans that exceed them are jumbo loans.
Jumbo mortgages may be needed by buyers in areas where housing is expensive, and they’re also popular among lovers of high-end homes, investors, and vacation home seekers.
Key Points
• A jumbo loan is a mortgage that exceeds FHFA limits.
• Since jumbo loans are for greater amounts than conforming loans and aren’t government-backed, they may carry higher risk for lenders.
• Conforming loan limits are set by county, with high-cost areas sometimes given higher limits.
• Qualifying for a jumbo loan may be more rigorous than qualifying for a conforming loan.
• Interest rates can be similar to or lower than conforming loan rates.
What Is a Jumbo Loan?
To understand jumbo home loans, it first helps to understand the function of Freddie Mac and Fannie Mae. Neither government-sponsored enterprise actually creates mortgages; they purchase them from lenders and repackage them into mortgage-backed securities for investors, giving lenders needed liquidity.
Each year the FHFA sets a maximum value for loans that Freddie and Fannie will buy from lenders — the so-called conforming loans.
Jumbo Loans vs Conforming Loans
Because jumbo home loans don’t meet Freddie and Fannie’s criteria for acquisition, they are referred to as nonconforming loans. Nonconforming, or jumbo, loans usually have stricter requirements because they carry a higher risk for the lender.
Jumbo Loan Limits
So how large does a loan have to be to be considered jumbo? In most counties, the conforming loan limits for 2025 are:
• $806,500 for a single-family home
• $1,032,650 for a two-unit property
• $1,248,150 for a three-unit property
• $1,551,250 for a four-unit property
The limit is higher in pricey areas. For 2025, the conforming loan limits in those areas are:
• $1,209,750 for one unit
• $1,548,975 for two units
• $1,872,225 for three units
• $2,326,8875 for four units
Given rising home values in many cities, a jumbo loan may be necessary to buy a home. Teton County, Wyoming, for instance, has an average home value of $2,219,744 and a conforming loan limit of $1,209,750.
Recommended: The Cost of Living By State
Qualifying for a Jumbo Loan
Approval for a jumbo mortgage loan depends on factors such as your income, debt, savings, credit history, employment status, and the property you intend to buy. The standards can be tougher for jumbo loans than conforming loans.
The lender may be underwriting the loan manually, meaning it’s likely to require much more detailed financial documentation — especially since standards grew more stringent after the 2007 housing market implosion and during the pandemic.
Lenders generally set their own terms for a jumbo mortgage, and the landscape for loan requirements is always changing, but here are a few examples of potential heightened requirements for jumbo loans.
• Your debt-to-income (DTI) ratio. This ratio compares your total monthly debt payments and your gross monthly income. The figure helps lenders understand how much disposable income you have and whether they can feel confident you’ll be able to afford adding a new loan to the mix.
To qualify for most mortgages, you need a DTI ratio no higher than 43%. In certain loan scenarios, lenders sometimes want to see an even lower DTI ratio for a jumbo loan, or they may counter with less favorable loan terms for a higher DTI.
• Your credit score. This number, which ranges from 300 to 850, helps lenders get a snapshot of your credit history. The score is based on your payment history, the percentage of available credit you’re using, how often you open and close accounts such as credit cards, and the average age of your accounts.
To qualify for a jumbo loan, some lenders require a minimum score of 700 or higher for a primary home, or up to 760 for other property types. Keep in mind that a lower score doesn’t mean you won’t be able to get a jumbo loan. The decision depends on the lender and other factors, such as the loan program requirements, your debt, down payment amount, and reserves.
• Down payment. Conforming mortgages generally require a 20% down payment if you want to avoid paying private mortgage insurance (PMI), which helps protect the lender from the risk of default.
Historically, some lenders required even higher down payments for jumbo mortgages, but that’s not necessarily the case anymore. Typically, you’ll need to put at least 20% down, although there are exceptions.
A VA loan can be used for jumbo loans. For borrowers with full entitlement, the Department of Veterans Affairs will insure any size loan. For those with partial entitlement, it will insure the part of the loan that falls under conforming loan limits minus anything still owed to the VA. The loan may be available from some lenders with nothing down and no PMI. VA loans have a one-time “funding fee,” though, which is a percentage of the amount being borrowed.
• Your savings. Jumbo loan programs often require mortgage reserves, money or assets borrowers could use to cover their housing costs. The number of months of PITI house payments (principal, interest, taxes, insurance), plus any PMI or homeowner association fees, needed in reserves after loan closing depends on many factors. For a jumbo loan, some lenders may require reserves of six to 24 months of housing payments.
You don’t necessarily need to have all the money in cash. Part of mortgage reserves can take the form of a 401(k), stock portfolios, mutual funds, money market accounts, and simplified employee pension accounts.
Also, depending on the loan program, a lender may be comfortable with lower cash reserves if you have a high credit score, low DTI ratio, a high down payment, or some combination of these things.
• Documentation. Lenders want a complete financial picture for any potential borrower, and jumbo loan seekers are no exception. Most lenders operate under the “ability to repay” rule, which means they must make a reasonable, good-faith determination of the consumer’s ability to repay the loan according to their terms. Applicants should expect lenders to vet their creditworthiness, income, and assets.
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Jumbo Loan Rates
You might assume that interest rates for jumbo loans are higher than for conforming loans since the lender is putting more money on the line.
But jumbo mortgage rates fluctuate with market conditions. Jumbo mortgage rates can be similar to those of other mortgages, but sometimes they are lower.
Because the absolute dollar figure of the loan is higher than a conforming loan, it is reasonable to expect closing costs to be higher. Some closing costs are fixed, such as a loan processing fee, but others, such as title insurance, are tiered based on the purchase price or loan amount.
Pros and Cons of Jumbo Loans
Benefits
Because a jumbo loan is for an amount greater than a conforming loan, it gives you more options for ownership of homes that are otherwise cost-prohibitive. You can use a jumbo loan to purchase all kinds of residences, from your main home to a vacation getaway to an investment property.
Drawbacks
Due to their more stringent requirements, jumbo loans may be more accessible for borrowers with higher incomes, strong credit scores, modest DTI ratios, and plentiful reserves.
However, don’t assume that jumbo loans are just for the rich. Lenders offer these loans to borrowers with a wide variety of income levels and credit scores.
Lender requirements vary, so if you’re seeking a jumbo loan, you may want to shop around to see what terms and interest rates are available.
The most important factor, as with any loan, is that you are confident in your ability to make the mortgage payments in full and on time over the long term.
How to Qualify for a Jumbo Loan
To qualify for a jumbo loan, borrowers need to meet certain jumbo loan requirements. You’ll likely need to show a prospective lender two years of tax returns, pay stubs, and statements for bank and possibly investment accounts. The lender may require an appraisal of the property to ensure they are only lending what the home is worth.
Is a Jumbo Loan Right for You?
You’ll need to come up with a large down payment on a property that merits a jumbo loan, and some of your closing costs will be higher than for a conventional loan. But depending on where you wish to buy, the cost of the property, and the amount you wish to borrow, a jumbo loan may be your only choice for a home mortgage loan. It’s a particularly attractive option if you have good credit, a low DTI, and a robust savings account. And sometimes jumbo home loans actually have lower interest rates than other loans.
What About Refinancing a Jumbo Loan?
After you’ve gone through the mortgage and homebuying process, it could be helpful to have information about refinancing. Some borrowers choose to refinance in order to secure a lower interest rate or more preferable loan terms.
This could be worth considering if your personal situation or mortgage interest rates have improved.
Refinancing a jumbo mortgage to a lower rate could result in substantial savings. Since the initial sum is so large, even a change of just one percentage point could be impactful.
Refinancing could also result in improved loan terms. For example, if you have an adjustable-rate mortgage and worry about fluctuating rates, you could refinance the loan to a fixed-rate home loan.
Recommended: Guide to Buying, Selling, and Updating Your Home
Jumbo Loan Limits by State
The conforming loan limits set by the Federal Housing Finance Agency can vary based on the county where you are buying a home.
In most areas of the country, the conforming loan limit for a one-unit property increased to $806,500 in 2025 (the amount rises for multiunit properties). The chart below shows exceptions to the $806,500 limit by state and county.
State | County | 2025 limit for a single unit |
---|---|---|
Alaska | All | $1,209,750 |
California | Alameda, Contra Costa, Los Angeles, Marin, Orange, San Benito, San Francisco, San Mateo, Santa Clara | $1,209,750 |
California | Monterey | $970,600 |
California | Napa | $1,017,750 |
California | San Diego | $1,077,500 |
California | San Luis Obispo | $967,150 |
California | Santa Barbara | $913,100/td> |
California | Santa Cruz | $1,178,750/td> |
California | Sonoma | $897,000 |
California | Ventura | $1,017,750 |
Colorado | Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, Park, | $833,750 |
Colorado | Boulder | $862,500 |
Colorado | Eagle, Garfield, Pitkin | $1,209,750 |
Colorado | Grand | $874,000 |
Colorado | Routt | $1,012,000 |
Colorado | San Miguel | $994,750 |
Colorado | Summitt | $1,067,200 |
Connecticut | Fairfield | $851,000 |
Florida | Monroe | $967,150 |
Guam | All | $1,209,750 |
Hawaii | All | $1,209,750 |
Idaho | Teton | $1,209,750 |
Maryland | Calvert, Charles, Frederick, Montgomery, Prince George’s County | $1,209,750 |
Massachusetts | Dukes, Nantucket | $1,209,750 |
Massachusetts | Essex, Middlesex, Norfolk, Plymouth, Suffolk | $914,250 |
New Hampshire | Rockingham, Strafford | $914,250 |
New Jersey | Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union | $1,209,750 |
New York | Bronx, Kings, Nassau, New York, Putnam, Queens, Richmond, Rockland, Suffolk, Westchester | $1,209,750 |
Pennsylvania | Pike | $1,209,750 |
Tennessee | Cannon, Cheatham, Davidson, Dickson, Macon, Maury, Robertson, Rutherford, Smith, Sumner, Trousdale, Williamson, Wilson | $989,000 |
Utah | Summit, Wasatch | $1,149,825 |
Utah | Wayne | $997,050 |
Virgin Islands | All | $1,209,750 |
Virginia | Arlington, Clarke, Culpeper, Fairfax, Fauquier, Loudoun, Madison, Prince William, Rappahannock, Spotsylvania, Stafford, Warren, and the cities Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, Manassas Park | $1,209,750 |
Washington | King, Pierce, Snohomish | $1,037,300 |
Washington D.C. | District of Columbia | $1,209,750 |
West Virginia | Jefferson County | $1,209,750 |
Wyoming | Teton | $1,209,750 |
Source: Federal Housing Finance Agency |
The Takeaway
What’s the skinny on jumbo loans? They’re essential for buyers of more costly properties because they exceed government limits for conforming loans. Luxury-home buyers and house hunters in expensive areas may turn to these loans, but they’ll have to clear the higher hurdles involved.
SoFi can help you save money when you refinance your mortgage. Plus, we make sure the process is as stress-free and transparent as possible. SoFi offers competitive fixed rates on a traditional mortgage refinance or cash-out refinance.
FAQ
What are jumbo loan requirements?
Jumbo loans typically require a credit score of at least 700, a low DTI, and a down payment of at least 20%, although there are always exceptions.
What is the difference between a jumbo loan and a regular loan?
A jumbo loan is a home mortgage loan that exceeds maximum dollar limits set by the Federal Housing Finance Agency. Jumbo loans are typically used by buyers in regions with higher-priced housing but are also popular among luxury homebuyers and investors.
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