Jumbo Loans

What Is a Jumbo Loan?

A Jumbo Loan is a mortgage that exceeds the conforming loan limits set annually by the Federal Housing Finance Agency (FHFA). Loans that fall below these limits are considered conforming loans and can be purchased or guaranteed by government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac. Loans above the limits are non-conforming, meaning they are not eligible for purchase by the GSEs, creating higher lender risk and generally stricter underwriting requirements (such as higher credit scores, larger down payments, and more reserves) compared to conforming loans.

Typical Use Cases

Jumbo loans are commonly used to finance high-value or luxury residential properties, including:

  • Primary residences
  • Second homes
  • Investment properties
    Because these loans are larger than the conforming threshold, lenders often require stronger financial profiles from borrowers.

Jumbo Loan Thresholds

A jumbo loan is any loan amount that:

  1. Exceeds the applicable conforming loan limit (baseline or high-cost area limit) for the property’s location and unit count, and
  2. Cannot be purchased or guaranteed by Fannie Mae or Freddie Mac at its original principal amount.

Accordingly:

  • In most of the U.S. for 2026, loans over $832,750 on a one-unit property are jumbo loans.
  • In high-cost areas, loans over $1,249,125 for a one-unit property are jumbo loans.

Lenders typically impose stricter credit, income, down payment, and reserve requirements on jumbo mortgages compared with conforming loans.

Key Considerations for Borrowers

Qualification:
Jumbo loans generally require:

  • Higher credit scores (often 700+)
  • Lower debt-to-income (DTI) ratios
  • Larger cash reserves
    These standards vary by lender and market conditions.

Pricing and Cost:
Interest rates on jumbo loans can be higher than conforming loans, although in some markets and borrower profiles they may be competitive with conforming rates.

Risk and Liquidity:
Because jumbo loans are not eligible for GSE purchase, they usually remain on the lender’s books or are sold to private investors, which can influence pricing and underwriting.