Closing costs are higher on jumbo loan refinances because they have higher principal balances. You can generally expect to pay 3% – 6% of your total loan amount in closing costs when you refinance.
Cons of Jumbo Loans
Higher closing costs and interest rates compared to conventional loans. Increased costs associated with jumbo loans make them less attractive to those looking to minimize upfront expenses. A cap on mortgage interest deduction for jumbo loans may limit the tax benefits borrowers can receive.
What disqualifies me from refinancing? Homeowners are commonly disqualified from refinancing because they have too much debt. If your DTI is above your lender's maximum allowed percentage, you may not qualify to refinance your home. A low credit score is also a common hindrance.
Bigger down payment
While it's possible to find jumbo loan lenders that will accept a 10% down payment, most will require you to put down at least 20%. That's a lot more than you'll need for a conforming loan, which usually only requires a down payment between 3% to 5% of the home's purchase price.
About jumbo loans
A loan is considered jumbo if the amount of the mortgage exceeds loan-servicing limits set by Fannie Mae and Freddie Mac — currently $806,500 for a single-family home in all states (except Hawaii and Alaska and a few federally designated high-cost markets, where the limit is $1,209,750).
A refinance is likely not worth it if the financial benefit is lower than the refinancing costs. A refi can also be a waste of time and money if you move before you hit the break-even point on closing costs. Also, if you add more years to your payoff, you'll be in debt longer and paying a greater amount of interest.
High debt-to-income ratio
How much of your money is tied up in paying off debts is a major factor in getting approved for refinancing. Your debt-to-income (DTI) ratio is determined by dividing your total monthly debts (including your current mortgage) by your gross monthly income.
The new monthly mortgage payment shouldn't be more than 30% of your monthly income. To refinance $400K over a 30-year fixed term with an interest rate of 3.5%, you'll need an income of approx. $6000/month. (This is an estimated example – rates and other factors are subject to change.)
Although a 700 credit score will typically get you a jumbo loan approval, lenders often offer the best jumbo mortgage rates to borrowers with higher credit scores. Make a bigger down payment. Unlike conventional loans, you'll need at least a 10% to 20% down payment to qualify for a jumbo loan.
Do jumbo loans require mortgage insurance? Making a down payment of less than 20% normally means you have to pay for private mortgage insurance (PMI). That's true for most jumbo loans as well as conforming mortgages. PMI can be pretty expensive — especially for jumbo loans.
2025 FHA County Loan Limits in California
The FHA's 2025 current floor is $524,225 and the ceiling is $1,209,750. FHA High Balance Jumbo loan limit – California FHA loan amounts in high-cost counties between $524,225 and $1,209,750 are referred to FHA jumbo loans or FHA high balance loans.
Getting a jumbo loan doesn't automatically mean paying a high interest rate. Lenders are often more competitive with jumbo mortgage rates than conventional loan interest rates. Your credit score, down payment, DTI and income will have a bigger impact on your rate than the size of the loan.
On average, homeowners can expect to pay 2% to 6% of the loan amount to refinance a mortgage. Refinancing a $300,000 home loan, for example, may cost $6,000 to $18,000.
The percentage of your home's value that can be borrowed on a refinance loan (known as the maximum loan-to-value ratio) varies by loan program and occupancy type, but generally the maximum on conventional conforming financing is 95% on rate/term refinance and 80% on cash-out.
Do you lose equity when you refinance? A straight refinance won't lower your home's equity unless you roll closing costs into your new loan. Adding these expenses to your mortgage balance decreases the paid-off portion of your home.
If you ask a loan officer, they'll most likely say anywhere from 30 to 45 days. While this is generally true, there are plenty of instances where it can take much longer. Read below to understand the factors that affect approval times for a cash-out refinance.
The most common reason why refinance loan applications are denied is because the borrower has too much debt. Because lenders have to make a good-faith effort to ensure you can repay your loan, they typically have limits on what's called your debt-to-income (DTI) ratio.
Whether rates are rising or falling, even a small drop of 1%, 0.5%, or as little as 0.25% in your interest rate could make refinancing worthwhile, depending on your existing mortgage loan and financial goals.
The Fed is widely expected to announce another 25bps cut to the federal funds rate at its December 2024 meeting, marking the third consecutive reduction this year and bringing borrowing costs to the 4.25%-4.5% range.
Refinancing can save you money if you get a lower interest rate, but you could also end up paying more if you refinance simply to extend the loan term. Refinancing can help you consolidate debt or tap your home equity for extra cash for renovations, but it can also lead to more debt.
A jumbo loan is a non-conforming loan for loan amounts greater than $806,500 for a single-family home. In certain high cost areas, including Alaska and Hawaii, the conforming limit is up to $1,209,750.
Each year, the Federal Housing Finance Agency determines the conforming loan limits. In 2024, the conforming loan limit for most counties in the U.S. is $766,550. For homes in Los Angeles County, the conforming loan limit is $1,149,825 in 2024.
Most lenders require at least 10% of the home's value as a down payment on a jumbo loan, although some may ask for up to 30% to reduce their risk. If you put less than 20% down, you'll likely be required to have private mortgage insurance (PMI) until you have at least 20% equity in your house.