Jumbo Loans: A Complete Guide

Jumbo loans are home loans that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). Because they are too large to be purchased by Fannie Mae or Freddie Mac, they are considered non-conforming loans and often have stricter qualification requirements.

Who Jumbo Loans Are For

Jumbo loans are ideal for buyers in high-cost real estate markets or those purchasing luxury homes that exceed the conforming limits. They’re also used by investors or professionals who want to finance larger primary residences or second homes.

Ideal for:

• Buyers purchasing homes priced above $766,550 (as of 2025, in most counties)

• Investors purchasing high-value properties

• Professionals in need of financing for primary or secondary luxury residences

Key Features of Jumbo Loans

• Loan amounts exceeding conforming limits

• Available for primary, secondary, or investment homes

• Fixed or adjustable-rate options

• No PMI required (in most cases, even with less than 20% down)

• Higher reserve requirements

Minimum Qualifications

Lenders take on more risk with jumbo loans, so the criteria are stricter:

• Credit Score: Typically 700 or higher

• Down Payment: Usually 10–20% or more

• DTI Ratio: Generally capped around 43% but varies by lender

• Reserves: 6 to 12 months of mortgage payments in assets

• Income: Must be well-documented, often including tax returns, W-2s, and additional income sources

Required Documents

You’ll need to provide more extensive documentation:

• Last 30 days of pay stubs

• Last 2 years of W-2s and tax returns

• 2+ months of asset/bank statements

• Proof of reserves (401(k), savings, brokerage accounts, etc.)

• Photo ID and Social Security number

• Credit authorization form

• Explanation letters for large deposits or irregularities

Seller Concessions

Seller-paid closing costs are often limited based on the loan-to-value (LTV) ratio and property type. While there is no government cap, most lenders follow:

• Primary residence: up to 6%

• Investment property: up to 2%

Lender policies vary, so always confirm the allowable concessions.

Property Requirements

• Appraisal typically required by two independent sources

• Home must meet stricter condition and value criteria

• Often limited to 1–2 units, depending on the lender

Loan Limits

Because jumbo loans are non-conforming, they have no upper cap—but most lenders have their own internal maximums, often between $2 million and $5 million. Some go higher with ultra-jumbo programs.