Jumbo Loans

Jumbo loans are mortgages that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). For 2024, any loan above $766,550 in most areas is considered a jumbo loan.

In high-cost areas like San Francisco, Los Angeles, and parts of New York, the conforming limit is higher—up to $1,149,825. Loans above these limits are jumbo loans.

Because jumbo loans aren't backed by Fannie Mae or Freddie Mac, they carry more risk for lenders. However, for well-qualified borrowers, jumbo loans offer competitive rates to finance luxury homes and properties in expensive markets.

Credit Score: Typically 700 minimum, though 740+ gets the best rates. Some lenders require 720+ for jumbo loans.

Down Payment: Usually 10-20% minimum. Larger down payments (20-30%) can secure better rates and terms.

Debt-to-Income: Maximum 43%, sometimes 45% with strong compensating factors. Jumbo loans have stricter DTI requirements than conforming loans.

Cash Reserves: Expect to show 6-12 months of reserves after closing. Higher loan amounts may require more reserves.

Income Documentation: Full documentation required—two years of tax returns, W-2s, pay stubs, and sometimes business financials.

Appraisal: Often requires two full appraisals from different appraisers to confirm value on high-dollar properties.

Contrary to popular belief, jumbo loan rates are often competitive with conforming loan rates. In some cases, they're even lower because jumbo borrowers typically have excellent credit and strong financial profiles.

Your interest rate will depend on your credit score, down payment, loan amount, property type, and overall financial strength. The stronger your profile, the better your rate.

Some lenders specialize in jumbo loans and can offer particularly competitive rates. It's worth shopping around with multiple lenders.

Consider adjustable-rate mortgages (ARMs) for jumbo loans if you plan to sell or refinance within 5-10 years. Jumbo ARMs often have very attractive initial rates.

Primary Residences: Best rates and terms available. This is where most jumbo loans are used.

Second Homes: Slightly higher rates than primary residences, but still very competitive for vacation properties.

Investment Properties: Higher rates and stricter requirements, typically requiring 25-30% down.

Condos: Available but may require higher down payments (25-30%) and the condo project must meet lender guidelines.

Multi-Unit Properties: 2-4 unit properties available with jumbo financing if living in one unit.

Luxury Properties: High-end homes, penthouses, and estates are common jumbo loan properties.

The jumbo loan process takes 45-60 days on average, slightly longer than conforming loans due to additional documentation and underwriting requirements.

Expect detailed financial scrutiny—lenders will verify all income sources, assets, and credit history. Large deposits will need to be explained and documented.

You'll need to provide extensive documentation: tax returns, W-2s, pay stubs, bank statements, investment account statements, and possibly business financial statements.

Be prepared for a thorough appraisal process. High-value properties may require two appraisals, and the appraiser will scrutinize comparable sales carefully.

Working with an experienced loan officer who specializes in jumbo loans can make the process much smoother. They'll know how to present your application for the best chance of approval at the best rate.