ARMs can be a good option if you plan to move or refinance before the initial rate period ends. Just understand the risks - rates could spike after 5 years, making the payment unaffordable. Run the numbers at the highest possible rate to ensure you can stomach the worst case scenario.
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.
A “jumbo loan” refers to any conventional mortgage larger than the conforming loan limits set by the Federal Housing Finance Agency (FHFA) each year. In 2025, single-family mortgages with balances higher than $806,500 in most U.S. counties (and $1,209,750 in certain high-cost areas) are considered jumbo loans.
An ARM is a mortgage with an interest rate that changes, or “adjusts,” throughout the loan. With an ARM, the interest rate and monthly payment may start out low. However, both the rate and the payment can increase very quickly.
At its February 2024 meeting, the Reserve Bank Board decided to leave the cash rate target unchanged at 4.35 per cent. This decision supports progress of inflation to the midpoint of the 2–3 per cent target range within a reasonable timeframe and continued moderate growth in employment.
Typically, jumbo loan rates are higher than conventional loan rates. Since jumbo loans carry higher loan amounts and pose higher risks to lenders, they often come with higher interest rates. Additionally, jumbo loans may require larger down payments and stricter qualification criteria compared to conventional loans.
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.
The only difference between conventional ARMs and Jumbo ARMs is that Jumbo ARMs allow borrowers to exceed the conforming loan limit of $726,200 for a one-unit home set by Freddie Mac and Fannie Mae.
What income is required for a 600k mortgage? To afford a house that costs $600,000 with a 20 percent down payment (equal to $120,000), you will need to earn just under $90,000 per year before tax. The monthly mortgage payment would be approximately $2,089 in this scenario. (This is an estimated example.)
Higher credit scores are needed to qualify for a jumbo versus a conforming loan. You will need, at the very least, a minimum score of 700 (most likely) to qualify for one. “The average is around 740, although I have seen some as low as 660,” says Robert Cohan, president of Carlyle Financial based in San Francisco.
Monthly payments on a $1,000,000 mortgage by interest rate
At a 7.00% fixed interest rate, your monthly mortgage payment on a 30-year mortgage might total $6,653 a month, while a 15-year might cost $8,988 a month.
Some ARMs may require you to pay fees or penalties if you refinance or pay off the ARM early, usually during the initial period (the first three to five years) of the loan. Prepayment penalties can total several thousand dollars. It's important to know about these potential extra fees before you take out an ARM.
What is the main downside of an adjustable-rate mortgage? The biggest risk of an ARM is that, after the initial fixed-rate period expires, your rate could increase, pushing up your monthly mortgage payment.
ARM requirements are similar to those for fixed-rate mortgages. However, qualifying for an adjustable-rate mortgage can be more difficult because you'll need enough income in case interest rates climb. As with any other mortgage, you'll need to prove your employment and income as part of the application.
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. Nearby Orange County is the same amount but in San Bernardino and Kern counties, the limit is $766,550.
You apply for a Jumbo Loan just as you would apply for any other loan. To get started, you will want to gather the following: Proof of income and employment (pay stubs, tax returns, W-2 statements etc.) Documentation of financial assets (bank statements, etc.)
Borrowers typically seek jumbo loans to finance high-value homes for which more traditional mortgage options are limited.
A balloon mortgage is a home loan with an initial period of low or interest-only payments. The borrower pays off the balance in full at the end of the term. A balloon mortgage is usually short-term, often five to seven years.
Home loans below the limit are called conforming mortgages. Home loans above the conforming loan limit are called jumbo mortgages. A jumbo mortgage can have a fixed rate or an adjustable rate. A 30-year jumbo mortgage will have a loan term of 30 years.
Today's rates seem high compared with the recent 2% rates of the pandemic era. But experts say getting below 3% on a 30-year fixed mortgage is unlikely without a severe economic downturn.
The Mortgage Bankers Association (MBA) in its 2025 finance forecast indicates that mortgage rates will gradually slide from 6.6% at the beginning of 2025 to 6.3% through 2026. The National Association of Home Builders is forecasting 6.12% in 2025 and 5.71% in 2026.