Jumbo Loan

Lenders take on more risk with jumbo loans since they can't offload them to the secondary market, which is why requirements are stricter. Most jumbo lenders want a credit score of 700–720 or higher, a down payment of at least 10–20%, a DTI below 43%, and 6–12 months of cash reserves (enough to cover 6–12 mortgage payments in savings). Documentation requirements are also more thorough. Because jumbo loans are held in a lender's own portfolio rather than sold to Fannie Mae or Freddie Mac, each direct lender sets its own guidelines—so program terms, rates, and flexibility can vary significantly from one lender to the next.

Jumbo loan rates have historically been slightly higher than conforming loan rates — the spread was often 0.25–0.75%. However, during periods of market stress, this spread can widen significantly. In 2022–2023, some jumbo products were actually priced below conforming rates as banks competed for high-net-worth borrowers. Shop multiple lenders for jumbo products, as pricing varies more than conforming loans.

High-cost markets like San Francisco, Los Angeles, New York, and Hawaii have elevated conforming loan limits up to $1,209,750, which means many expensive markets don't need jumbo financing until well above $1 million. Check your specific county's limit before assuming you need a jumbo loan.