Definition
A jumbo mortgage (or jumbo loan) is a home loan that exceeds the Federal Housing Finance Agency’s conforming loan limits. In 2025 the baseline conforming limit for most U.S. counties is $806,500 — any mortgage above that threshold is considered a jumbo mortgage. Because jumbo loans are larger than what Fannie Mae and Freddie Mac will buy, they carry different underwriting standards and lender expectations.
Key features
- Higher loan amounts: Used when a purchase price or refinance exceeds the local conforming limit; limits are higher in some high-cost counties, but many luxury properties still require jumbo financing.
- Stricter borrower requirements: Typical lender criteria include a minimum FICO score around 700–720 (many prefer 760+), down payments of 10–20% or more, and a debt-to-income (DTI) ratio generally 43% or lower.
- Cash reserves: Lenders frequently require proof of 6–12 months of mortgage payments in liquid assets.
- Documentation and manual underwriting: Expect more extensive tax returns, W-2s, bank and investment statements, and often manual underwriting where an underwriter reviews the full financial picture.
- Interest rates: Historically higher than conforming loans, jumbo mortgage rates have narrowed in recent years and can be competitive for well-qualified borrowers.
Typical qualification checklist
- Credit score: 700–760+ recommended
- Down payment: 10–20% (varies by lender and loan size)
- DTI: Preferably ≤43%, sometimes up to ~50% for very strong profiles
- Cash reserves: 6–12 months of mortgage payments
- Documentation: 2+ years tax returns, pay stubs, bank/investment statements, asset verification
Real-world uses
- Luxury home purchases: Buyers of high-end homes (for example, a $1.2M house in Los Angeles or a $1.5M Manhattan penthouse) typically need jumbo financing.
- High-cost markets: In cities like San Francisco, Boston, Seattle and parts of Southern California, many single-family home purchases will require a jumbo mortgage.
- Investment and vacation properties: Investors buying high-value rentals or second homes (e.g., a $900K beachfront condo) often use jumbo loans.
- Custom or large builds: Custom homes with large lots or high-end finishes frequently exceed conforming limits and need jumbo financing.
Case study — jumbo mortgage in action
Sarah and John plan to buy a $950,000 home in Austin. The conforming limit in their county is $806,500, so they need a jumbo mortgage for the $143,500 above the limit. With a combined credit score of 740, a 38% DTI, a 20% down payment and 12 months of reserves, they provide full documentation. After manual underwriting they’re approved and close with a competitive rate.
Why jumbo mortgages matter
Jumbo mortgages make high-value homeownership possible in expensive markets and for buyers seeking luxury or custom properties. While they require stronger credit, larger down payments and more documentation, they enable wealth-building through real estate and expand financing options where conforming loans aren’t sufficient.
Key takeaways
- A jumbo mortgage finances amounts above the FHFA conforming limit (baseline $806,500 in 2025).
- Expect stricter credit, down payment, DTI and cash-reserve requirements than for conforming loans.
- Manual underwriting and detailed documentation are common.
- Common in high-cost markets, luxury purchases, investment properties and custom builds.
