Jumbo loans (above the conforming limit)

How a jumbo loan works

A jumbo loan is any mortgage above the conforming loan limit, the largest amount Fannie Mae and Freddie Mac can buy: $832,750 in most counties. Because they cannot buy it, the lender keeps the loan or sells it to private investors, and writes its own rules.

• Credit score: 700 or higher at most lenders
• Down payment: usually 10–20%, set by the lender
• Reserves: 6–12 months of payments in liquid assets after closing
• Debt-to-income: typically 43–45%, with full income and asset documentation

No single Fannie Mae or Freddie Mac rulebook governs jumbo loans, so terms vary more than on conforming loans. Two banks can set different score floors, reserve rules and rates for the same borrower, which makes comparing lenders worthwhile.

Is your loan a jumbo?

What decides it is the loan amount against the limit in the home's county, not the price. A bigger down payment can bring a loan under the line, and a high-cost county's limit can sit above $832,750. Look up your county in the conforming loan limit tables.

What a jumbo loan really costs

Borrowing $1,000,000 shows what crossing the limit costs. The table prices one jumbo loan at 7.25%, the 30-year average on Nov 5, 2026, against a $832,750 conforming first mortgage at 7.09% plus a second at prime plus an illustrative 1.5 percentage points. Check today's jumbo rates for the latest weekly average.

Splitting the loan costs $220 more a month than the jumbo, $7,042 against $6,822. Two things drive that gap: the second mortgage's 8.50% rate against the jumbo's 7.25%, and its shorter 20-year term, which pays the balance down faster.

Reserves are the cash requirement the payment doesn't show. Lenders typically want 6–12 months of payments left in liquid assets after closing, which on this loan is $40,932–$81,864 of principal and interest alone, on top of the down payment and closing costs.

Costs that never show in the payment

The monthly payment leaves out several costs that jumbo borrowers should price before applying. Policies differ by lender, so confirm each one in writing:

• Second appraisal: some lenders order one on very large loans
• Reserve valuation: some lenders count retirement or stock accounts at a discount
• Pricing and points: quotes vary more by lender than conforming loans do
• Taxes and insurance: escrow grows with the home's value, above principal and interest

When a jumbo loan goes wrong

Jumbo loans rarely fail on the rate. They stall or strain borrowers on the terms below, usually because the lender, not an agency, sets them:

• Reserve shortfall: cash counts only after closing, sometimes at a discount
• Appraisal gap: a low or second appraisal can shrink or stall the loan
• Lender-specific rules: no agency standard to fall back on if a bank declines
• Deduction cap: interest counts only on the first $750,000 of debt

Under IRS Publication 936, you can deduct home mortgage interest only on the first $750,000 of acquisition debt, and only if you itemize. On a $1,000,000 loan that covers about 75% of the interest. Splitting the loan doesn't raise the cap, because it applies to your combined acquisition debt.

Jumbo vs. conforming vs. conforming plus a second mortgage

These three structures can finance the same home, but they differ in who sets the rules, how much cash you need and how many liens you carry.

If your loan lands just above the standard limit, price a high-balance conforming loan first, since agency rules are standardized and often less demanding than a bank's jumbo rules. The piggyback loan guide covers the split structure in depth.

Who a jumbo loan fits

A jumbo loan fits buyers whose loan exceeds the local limit and whose cash holds up after closing, not only those with high incomes.

• A credit score of 700 or higher
• Cash for the down payment, closing costs and reserves
• Documented income that fits a debt-to-income ratio near 43–45%
• A loan above your county's conforming limit

Skip a jumbo if your loan sits within reach of a high-balance limit, or if funding reserves would drain your savings. Both cases favor a smaller or agency-eligible loan. Test the payment first in the home affordability calculator.

Jumbo loans: pros and cons

What jumbo lenders look for

Published minimums cluster around a credit score of 700, a down payment of 10–20% and 6–12 months of payments in reserve. Lenders typically cap debt-to-income near 43–45%, though the exact line is theirs to set.

Scores of 740 and up, a down payment at the top of the range and reserves toward the high end usually earn the best pricing. Private banks sometimes bend the minimums for clients who also keep large deposits with them.

Requirements at a glance

• Loan amount above your county's conforming limit ($832,750 in most counties)
• Credit score of 700 or higher at most lenders, with 740 or higher earning the best pricing
• Down payment of 10–20%, depending on the lender and loan size
• Debt-to-income ratio of 43–45% or lower at most lenders
• Cash reserves of 6–12 months of payments after closing
• Full income and asset documentation, and sometimes a second appraisal