Borrowers typically seek jumbo loans to finance high-value homes for which more traditional mortgage options are limited.
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.
A jumbo loan is a great option for homebuyers searching for an expensive home or any home in a robust housing market. Currently, these loans may offer an advantage to buyers in high-cost real estate markets, though higher interest rates may offset some of the benefits.
Payment: Often, jumbo loans require at least 10-20% down. Stricter Debt-to-Income Ratios (DTI): Lenders look for a DTI of 43% or lower. Documentation: You'll need to provide more documentation, such as income verification and asset statements.
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.
Jumbo loans also have stricter approval requirements: You'll need a higher credit score, a larger down payment and a lower debt-to-income ratio than you would for a conventional loan. You may also face higher closing costs and show that you have a sizable cash reserve.
In general, a jumbo loan will have higher interest rate than a conventional loan. However, if you can prove that you are a high-income earner with definitive capability of paying back your loan, some lenders may deem you as lower risk and thus provide you with a comparable interest rate to a conventional loan.
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).
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.
Qualification Thresholds for Jumbo Loans
There usually is a hard credit score minimum of 700, and many lenders may even require as high as 720 or 740. Debt-to-income (DTI) ratio: The maximum DTI for a Jumbo loan is typically around 45%,though this can vary depending on the specific lender.
Difficult process: Jumbo loans come with higher risks for the lender which makes the refinancing process time-consuming. This also means the requirements can be stricter than conforming mortgages. Lenders usually look for high credit scores, low DTI ratios and good cash reserves.
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.
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.
Reduce your loan term
Making the equivalent of two extra mortgage payments per year, for example, will knock off 9 years and 4 months from the total term of your loan. A shorter mortgage term also means that you'll own your house outright sooner.
Definition of Jumbo loan Origination fee: A jumbo loan origination fee is a percentage of the loan amount that lenders charge borrowers. It is typically expressed as a percentage, ranging from 0.5% to 1.5% of the loan amount.
Drawbacks include stricter requirements to qualify, large payments if market rates increase, lack of 5% equity requirement, and additional fees if borrower has a less than excellent credit score.
As a general rule of thumb, you can expect to make a down payment of at least 10% on your jumbo loan. Some lenders may require a minimum down payment of 25%, or even 30%. While a 20% down payment is a good benchmark, it's always best to talk to your lender about all options.
Jumbo loans work differently than conventional mortgages. These loans have stricter requirements than other types of mortgages, and you'll have to meet very specific property type, down payment, credit score and debt-to-income ratio requirements to get one.
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.
1. Max debt-to-income ratio (DTI) for jumbo loans is usually 43% Your DTI is the percentage of your monthly earnings used to pay off all debt obligations and it's used by lenders to determine how large of a monthly mortgage payment you can handle.
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.