Loan Programs

Jumbo Loan Guide

Everything you need to know about jumbo loans for high-value home purchases that exceed conforming loan limits.

NMHL Team2026-02-0512 min read

What Is a Jumbo Loan?

A jumbo loan is a mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency. Because these loans are too large to be purchased by Fannie Mae or Freddie Mac, they cannot be securitized in the conventional secondary mortgage market. This means lenders keep jumbo loans on their own books or sell them to private investors, which introduces additional risk that is typically passed on to borrowers through stricter qualification requirements and sometimes slightly higher interest rates. Jumbo loans are essential in high-cost housing markets where median home prices exceed conforming limits. Cities like San Francisco, New York, Los Angeles, and Seattle often require jumbo financing for even moderately sized homes. These loans serve a critical role in making homeownership accessible in expensive markets where conforming limits fall short. Despite their larger size, jumbo loans function similarly to conventional mortgages. They are available with fixed and adjustable interest rates, various term lengths from 10 to 30 years, and can be used for primary residences, second homes, and investment properties. The key difference lies in the underwriting standards, which are considerably more demanding.

For 2026, the baseline conforming loan limit is $766,550 for most areas, with higher limits up to $1,149,825 in designated high-cost areas. Any loan exceeding these limits is classified as a jumbo loan.

Key Tips

  • Check the conforming loan limit for your specific county before assuming you need a jumbo loan
  • Some lenders offer jumbo loan rates that are competitive with or even lower than conforming rates
  • Consider whether a piggyback loan strategy could keep you within conforming limits

Jumbo Loan Limits and Thresholds

The threshold at which a loan becomes a jumbo varies by location. The Federal Housing Finance Agency adjusts conforming loan limits annually based on changes in average home prices. In most of the United States, the 2026 conforming limit is $766,550 for a single-family home. However, in high-cost areas designated by the FHFA, limits can reach up to $1,149,825. These high-cost areas include parts of California, Hawaii, Alaska, Washington DC, and the New York metropolitan area. For multi-unit properties, the limits are higher: up to $981,500 for a two-unit property, $1,186,350 for a three-unit property, and $1,474,400 for a four-unit property in standard areas. High-cost area limits for multi-unit properties are correspondingly higher. Understanding these thresholds is important because even a small amount over the conforming limit triggers jumbo underwriting requirements. Some borrowers strategically make larger down payments to keep their loan amount within conforming limits, which can result in better rates and easier qualification. Another strategy is using a piggyback loan, where a conforming first mortgage is combined with a smaller second mortgage or HELOC to finance the full purchase amount while keeping the primary loan within conforming territory.

Key Tips

  • FHFA adjusts limits annually, so check the current year limits for your county
  • Increasing your down payment by even a small amount could keep you within conforming limits
  • Piggyback loans can sometimes offer better overall terms than a single jumbo loan

Qualification Requirements

Qualifying for a jumbo loan requires stronger financial credentials than a conforming mortgage. Most lenders require a minimum credit score of 700, with many preferring 720 or higher for the best rates. Your debt-to-income ratio should generally be below 43 percent, though some lenders cap it at 36 percent for jumbo loans. Down payment requirements are typically 10 to 20 percent, with many lenders requiring at least 20 percent for loan amounts over $1.5 million. Unlike conforming loans where private mortgage insurance allows lower down payments, jumbo PMI options are limited and expensive. Lenders require substantial cash reserves after closing, usually 6 to 12 months of mortgage payments held in liquid assets. This ensures you can continue making payments even if your income is temporarily disrupted. Documentation requirements are extensive. Expect to provide two years of tax returns, W-2 forms, recent pay stubs, bank statements for all accounts, investment account statements, and documentation for any additional income sources. Self-employed borrowers face even stricter scrutiny and may need to provide business tax returns, profit and loss statements, and a letter from their CPA. Some lenders may require two appraisals for jumbo loans to ensure accurate property valuation.

Jumbo loan lenders typically require 6-12 months of cash reserves after closing, compared to 2 months for most conforming loans. This is one of the biggest hurdles for borrowers.

Key Tips

  • Start building your cash reserves well before applying
  • Avoid large deposits or withdrawals that require extensive documentation
  • Get pre-approved with a lender experienced in jumbo financing

Jumbo vs. Conforming Loans

Understanding the differences between jumbo and conforming loans helps you determine which option is best for your situation. Conforming loans follow standardized guidelines from Fannie Mae and Freddie Mac, while jumbo loan requirements vary by lender since there is no government agency setting uniform standards. This variation means it pays to shop around with multiple jumbo lenders. Interest rates on jumbo loans have historically been slightly higher than conforming rates, typically by 0.25 to 0.50 percent. However, in recent years the spread has narrowed, and some lenders actually offer jumbo rates lower than conforming rates to attract high-net-worth borrowers. The rate you receive depends heavily on your financial profile and the amount of business you bring to the lender. Conforming loans offer more flexibility for borrowers with lower credit scores or smaller down payments, thanks to government-backed insurance programs. Jumbo loans require more from the borrower but can finance properties that would otherwise be impossible to purchase with a single loan. Processing times for jumbo loans are often longer due to the additional documentation and underwriting scrutiny required. Plan for a closing timeline of 45 to 60 days rather than the 30 to 45 days typical of conforming loans.

Key Tips

  • Compare jumbo and conforming rates from multiple lenders before deciding
  • Ask about relationship pricing discounts if you hold other accounts with the lender
  • Factor in the longer processing time when planning your purchase timeline

Tips for Jumbo Loan Approval

Securing approval for a jumbo loan requires careful preparation. Start by reviewing your credit reports at least six months before applying and address any errors or negative items. Pay down existing debts to improve your debt-to-income ratio and demonstrate financial responsibility. Build your cash reserves by consolidating funds into easily documented accounts and avoiding large, unexplained transfers. Choose a lender with extensive jumbo loan experience, as not all lenders are equally comfortable with large loan amounts. Portfolio lenders, which keep loans on their books rather than selling them, often offer more flexible terms and competitive rates for jumbo borrowers. Private banks and credit unions serving affluent communities are particularly strong in this space. Consider the relationship banking approach. Lenders may offer better rates and terms if you maintain substantial deposits or investment accounts with them. Some lenders discount jumbo rates by 0.125 to 0.375 percent for borrowers with significant assets under management. Be prepared for a thorough review of your financial history. Organize your documents early, provide prompt responses to lender requests, and be transparent about your financial situation. Any inconsistencies in your application can delay or derail the process. Finally, get multiple rate quotes. Because jumbo loans are not standardized, there can be significant variation in rates and terms between lenders.

Portfolio lenders and private banks often provide the most competitive jumbo loan terms, especially when you establish a broader banking relationship.

Key Tips

  • Apply with at least three lenders to compare rates and terms
  • Ask about rate lock options given the longer processing timeline
  • Maintain stable finances and avoid major changes during the application process
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Frequently Asked Questions

Most jumbo loans require a minimum down payment of 10 to 20 percent. For loan amounts exceeding $1.5 million, lenders typically require at least 20 to 25 percent down. Some lenders offer jumbo loans with as little as 5 or 10 percent down, but expect higher interest rates and may require private mortgage insurance.

Jumbo loan rates have historically been slightly higher than conforming rates, usually by 0.25 to 0.50 percent. However, the gap has narrowed significantly in recent years, and some lenders offer jumbo rates that are competitive with or even lower than conforming rates, especially for well-qualified borrowers with strong relationship banking ties.

While some lenders may consider credit scores as low as 680 for jumbo loans, most prefer a minimum of 700, and the best rates are typically reserved for borrowers with scores of 740 or higher. A lower credit score may result in a higher interest rate, a larger down payment requirement, or both.

Yes, jumbo loans are available for investment properties, but expect stricter requirements. Investment property jumbo loans typically require a minimum down payment of 25 to 30 percent, higher credit scores, larger cash reserves of 12 to 18 months, and carry interest rates approximately 0.50 to 0.75 percent higher than primary residence jumbo rates.

Jumbo loans typically take 45 to 60 days to close, compared to 30 to 45 days for conforming loans. The additional time accounts for more extensive documentation requirements, potential second appraisals, and thorough underwriting review. Some lenders with dedicated jumbo departments can close faster, so ask about typical timelines when comparing lenders.

Related Resources

Understanding Mortgage Rates

Learn how rates work and how to get the best jumbo loan rate.

Credit Score Mortgage Guide

Understand how your credit score impacts jumbo loan qualification.

Closing Costs Explained

Learn about the closing costs associated with jumbo loans.

Jumbo Loans

Jumbo loans exceed conforming loan limits and are designed for luxury properties and homes in high-cost areas. With competitive rates and flexible terms, our jumbo loan programs help you finance your dream home without limits.

Conventional Loans

Conventional loans are not backed by government agencies and typically offer the most flexibility for qualified borrowers. With options for as little as 3% down and the ability to cancel mortgage insurance, conventional loans are ideal for borrowers with good credit.

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