• Jumbo loans are home mortgages that exceed the loan limits for conventional mortgages. They are often used to buy homes that are more expensive than the average local home.
  • To qualify for a jumbo loan, you may need a higher credit score, lower debt-to-income ratio (DTI), higher down payment, and/or higher cash reserves.
  • Jumbo loans can be used for primary residences, vacation homes, second homes, and investment properties of up to four units.

Are you looking for a home loan of more than $806,500 to buy your new home or investment property (or more than $1,209,750 in high-value markets)? If you have a strong credit score and financial profile, a jumbo loan might be the right financing solution for you.

In this article, you’ll get answers to important questions about jumbo loans, including:

  • What is a jumbo mortgage and how does it work?
  • What are the pros and cons of jumbo loans?
  • How does a homebuyer qualify for a jumbo loan?

What Is a Jumbo Loan?

A jumbo loan is any home mortgage that exceeds the loan limits set by government-sponsored enterprises, Fannie Mae and Freddie Mac, under the supervision of the Federal Housing Finance Agency (FHFA).[1]

In 2025, a jumbo loan is any loan amount over $806,500 across most of the continental United States.[2] However, the limit extends to $1,209,750 in Alaska, Hawaii, Guam, and the U.S. Virgin Islands, as well as high-value markets nationwide (including expensive cities like New York City, Los Angeles, and Chicago). Jumbo loans may allow eligible buyers to purchase a property worth up to $5 million.

Because jumbo loans do not conform to conventional loan standards, they are often called non-conforming loans.

How Do Jumbo Loans Work?

Jumbo loans provide a path to ownership of higher-value properties through larger loan amounts than conventional mortgages. However, lending higher-than-normal amounts creates greater risk for the lender. So lenders may have stricter borrower requirements to offset the increased risk.

Since jumbo loans do not meet the FHFA’s loan limits, they cannot be purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac for the secondary market.[3] This gives individual lenders more flexibility to structure the loan in a way that makes financial sense for them and the borrower.

Jumbo Loan Interest Rate Options

Jumbo loans may offer the following interest rate structures:

  • Fixed-Rate. With a fixed-rate mortgage, you can lock in the current interest rate for the life of the loan (until the loan is repaid or refinanced). This creates more predictable mortgage payments, simplifying long-term budgeting.
  • Adjustable-Rate. With an adjustable-rate mortgage (ARM), the interest rate automatically fluctuates to reflect changing market conditions at set intervals (after an initial introductory period). ARMs typically offer lower introductory rates than fixed-rate mortgages, but it is important to confirm that you can comfortably cover the mortgage if the interest rate increases over time.[4]

Additionally, some mortgage lenders offer an interest-only payment option for well-qualified borrowers. This structure allows you to repay only the interest on the loan for an introductory period (perhaps five or seven years), followed by higher principal and interest payments after the introductory period.

Jumbo Mortgage Loan Term Options

Like conventional home loans, jumbo loans are available in different durations, such as 10, 15, 20, 25, or 30 years.

A longer loan term can reduce the monthly mortgage payment by stretching the principal balance over more payments. Shorter loan terms, on the other hand, typically cost less over the long term due to lower interest expenses but result in higher monthly payments.[5]

You can use a mortgage payment calculator to see how your loan term affects your payment amounts.

What Are the Requirements for a Jumbo Loan?

Jumbo loan requirements vary by lender but may include the following:[6]

  • A higher down payment. Depending on other qualifying factors listed below, you may need to put down 15-40% of the purchase price.
  • A low debt-to-income ratio. DTI compares your monthly debt obligations to your verifiable monthly income. A lower DTI may indicate greater financial stability.
  • A higher credit score: Jumbo loans may require credit scores over 680. Higher scores may qualify you for lower interest rates.
  • Cash reserves. Some lenders may require that your savings accounts have enough money to cover six months or more of mortgage payments (after paying the down payment and closing costs).
  • Appraisal. Before funding the loan, the lender may want to have the property appraised to confirm that it is worth the amount you are paying for it.

Pros and Cons of Jumbo Loans

The benefits of jumbo loans include:[6]

  • Access to more funding. Jumbo loans can help you purchase a high-value property (or a property in a high-value market).
  • Competitive interest rates. While jumbo mortgage rates used to be substantially higher than conventional mortgage rates, they now offer more comparable rates.
  • Flexibility. You can choose from a range of loan terms and interest rate options.
  • Available for multiple property types. Jumbo loans can be used for primary residences, second homes, vacation homes, and investment properties.

The potential downsides of jumbo loans include:[6]

  • Stricter qualification requirements. You may need better credit, a lower DTI, and/or more assets to qualify for a jumbo loan.
  • Higher down payment requirements. While well-qualified conventional borrowers may put as little as 3% down, you may need 15-40% down for a jumbo loan.
  • Limited lender options. Some lenders do not offer jumbo loans.
  • Higher total interest expense. Even at comparable interest rates and loan terms, the higher loan amount results in higher interest expenses.

If you are unsure if a jumbo loan is the right solution for you, explore other types of mortgage loans to find a better fit.

How To Apply for a Jumbo Loan

Start by finding a mortgage lender who offers jumbo loans. Then, you can submit an application for the loan. As part of the application process, you’ll answer questions relating to your identity, employment, and finances. You’ll also have a chance to provide supporting documents, including:[7]

  • Proof of identity: A passport or driver’s license.
  • Proof of income: Pay stubs, W2s, and tax returns.
  • Proof of assets: Investment account and bank statements.
  • A list of current debts: Active credit cards, student loans, auto loans, personal loans, etc.
  • Authorization for the lender to check your credit: This "hard inquiry" into your credit can decrease your credit score temporarily by a few points.

The lender reviews your application and documentation to determine if you qualify for a jumbo loan, how much they can lend you, and at what interest rates.

The lender will also review the property, ordering a home appraisal and title search to ensure that the property is worth the purchase price and that the owner has the legal right to sell.

Jumbo Loan FAQs

What Is the Difference Between a Jumbo Loan and a Regular Loan?

The term "regular loan" is not a recognized mortgage product, but it is often used to mean “conventional loan.” Compared to conventional loans, jumbo loans offer higher loan limits but may come with stricter qualification requirements.  

Do You Have to Put 20% Down on a Jumbo Loan?

The down payment required for a jumbo loan depends on multiple factors, including the purpose of the property (primary residence, second home, or investment property), your debt-to-income ratio, your credit score, and the lender’s policies. Down payments for a jumbo loan may range between 15% and 40%. 

Can Self-Employed Workers Qualify for a Jumbo Loan?

You might qualify for a jumbo loan as a self-employed worker if you can show that you consistently earn enough to cover the mortgage payment plus your existing debt obligations. Annual tax returns showing stable or growing income can help you qualify. 

Does the VA Offer Jumbo Loans?

The Department of Veterans Affairs does offer jumbo VA loans to qualified veterans, military service members, and their families. Learn more about VA home loan options.

The Bottom Line

Jumbo mortgage loans are not suitable for all homebuyers or all properties. However, if you have strong credit and finances, a jumbo loan can help you access more than $806,500 to purchase your next home or investment.