What Is a Jumbo Loan?

Images by GettyImages; Illustration by Hunter Newton/Bankrate

Key takeaways

In most parts of the U.S., a jumbo loan is a mortgage exceeding $832,750 as of 2026, but the amount varies by county.
Jumbo loans generally require a higher credit score, a higher level of income or assets and a larger down payment than non-jumbo loans.
The interest rates on jumbo loans are usually higher than those on regular, conforming mortgages.

A jumbo loan is a type of mortgage that exceeds the conforming loan limits for its area, set annually by the Federal Housing and Finance Agency (FHFA). In most parts of the U.S., the limit for 2026 is $832,750.

Many mortgage lenders offer jumbo loans of up to $3 million or $5 million. You can find jumbo loans in even higher amounts, especially if you work with a mortgage broker who specializes in them.

Jumbo loans can be used for primary residences, investment properties and vacation homes. While you might use one to buy a mansion, you may also need one to buy a regular home in a pricey neighborhood.

How do jumbo loans work?

Despite their “nonconforming” status, jumbo loans aren’t very different from traditional mortgages. For example, borrowers can get fixed- or adjustable-rate jumbo mortgages with various term options.

However, the interest rates on jumbo loans are often higher than those for conforming loans, though the gap has closed recently. As of Dec. 7, 2025, the 30-year fixed jumbo rate was 6.54%, according to Bankrate’s survey of national lenders, while it was 6.28% for the traditional 30-year fixed loan. This is partly because Fannie Mae and Freddie Mac increased the guarantee fees they charge to lenders on conforming loans.

Jumbo loans vs. conforming loans

Most loans are conforming, meaning they meet the specific criteria set by Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy most U.S. home loans. Jumbo loans do not adhere to these criteria; hence, they fall into the financing category of nonconforming loans. That means lenders must retain these loans rather than selling them.

Jumbo loan limits

For 2026, the conforming loan limit in most of the continental U.S. is $832,750. However, in Hawaii, Alaska and certain counties with significantly higher median home prices than the national average, the limit can be as high as $1,299,500.

Because homes that cost above these sums require a jumbo loan, these ceilings are often called “jumbo loan limits” — though technically, they’re the starting points for jumbos.

Loan limits by state

The table below provides state-by-state conforming loan limits for 2026. In many states, the limits vary by county.

How to qualify for a jumbo mortgage loan

Because the loans aren’t backed by Fannie or Freddie, jumbo mortgages pose more risk to the lender — so jumbo lenders typically impose stricter underwriting guidelines than conforming mortgage lenders do. If you want to take out one of these hefty loans, you’ll need to make sure your financial profile is very good or excellent.

There are three common hurdles borrowers must clear to get approved for a jumbo loan:

Income: Your debts usually need to be less than one-third of your income.
Credit score: Many lenders require a minimum credit score of 700 to qualify for a jumbo loan.
Cash reserves: You must typically make a down payment of 10% to 20% for a jumbo loan.

Jumbo loan income requirements

Yes, it’ll help if you have a large income — and, just as importantly, if you have a low debt-to-income (DTI) ratio. If much of your monthly income is eaten up by debt payments — say, more than one-third — you might not qualify for a jumbo loan unless your credit score is excellent or you have a sizable amount of reserves or liquid assets.

Jumbo loan credit score

You’ll need a higher credit score to qualify for a jumbo loan than for a conforming loan. For example, U.S. Bank requires a minimum credit score of 740 to be considered for most jumbo loans, compared with 620 for a conforming loan.

Keep in mind: Most jumbo loans are conventional loans, offered by private lenders as opposed to a government agency. One exception is the VA jumbo loan. Active military or veterans can qualify with a significantly lower credit score, sometimes in the mid-to-low 600s.

Jumbo loan down payment

You may be required to make a substantial down payment to qualify for a jumbo loan — typically 10% to 20%. Be prepared to show enough reserves, or liquid assets, to cover between six and 12 months’ mortgage payments.

For example, if you’re taking out a $1 million jumbo loan, you’ll likely need $100,000 to $200,000 for a down payment. And assuming you’re borrowing at the current average rate, you should also have another $40,000 to $80,000 in reserve, on top of what you’ll need for closing costs.

Is a jumbo loan right for me?

Jumbos are meant for buyers with ample resources. A jumbo loan might be right for you if you:

Have a strong financial profile: Excellent credit, a low DTI ratio and at least six months of cash reserves.
Want or need a high-priced property: If you live in some parts of the country, a jumbo loan is essential to buy even a modest home.

That said, a jumbo loan is not for you if it means you’ll end up being house poor, meaning your homeownership costs squeeze out everything else in your budget.

If you can’t qualify for a jumbo loan — or don’t want one — you might consider a piggyback loan arrangement, in which you take out two smaller mortgages, both conforming, instead.

Frequently asked questions

If you want a good rate on a jumbo mortgage, you’ll need to ensure your credit is very good to excellent. Like any home loan, it’s worth shopping around with lenders to see which offers you the best rate. If you can make a larger down payment — above and beyond the standard 20% — it may also help you qualify for a lower rate.
The closing costs for a jumbo loan are similar to those for conforming loans: 2% to 6% of the home’s purchase price. But while the percentage is the same, the property’s higher price means you’ll pay more in fees. For example, a loan on a $1 million property could cost $20,000 to $60,000 in closing costs alone.
A jumbo loan has reduced tax benefits compared to a standard mortgage. For mortgages taken out after Dec. 16, 2017, the IRS allows for deducting home mortgage interest on the first $750,000 of mortgage debt (or $375,000 if you are married and file separate tax returns). Taking out a jumbo loan means you can’t write off the entirety of your mortgage interest on federal tax returns each year.

However, mortgage interest deductions are higher for homeowners whose mortgages were established before December 16, 2017. In that case, mortgage interest on up to $1 million (or $500,000 for those who are married and filing separately) can be deducted on tax returns. Passage of the One Big Beautiful Bill Act of 2025 made this limit permanent.
You can refinance your jumbo loan, but it may be more complex than refinancing a conforming loan. That’s because lenders have different financial requirements for jumbo mortgages, potentially limiting the pool of lenders you can work with. Plus, jumbo loans come with higher closing costs, which makes your break-even period longer than it would be with a conforming loan.

Did you find this page helpful?

Help us improve our content

Read the full article here

Installment Nexus

Trending →

6 Best Investments For Beginners: A Complete Guide

Mortgage Rate History: 1970s To 2025