Jumbo Loan Calculator

What is a Jumbo Loan?

A jumbo loan, also called a jumbo mortgage or non-conforming loan, is a type of financing that exceeds the limits set by the Federal Housing Finance Agency (FHFA). As of 2025, the standard conforming loan limit is $806,500 for most of the United States, while high-cost areas have limits up to $1,209,750. Any loan amount above these thresholds requires jumbo financing.

Unlike conforming loans, jumbo loans cannot be purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac. This means lenders assume more risk, which typically results in stricter qualifying requirements and slightly higher interest rates.

Jumbo Loan Requirements

Jumbo mortgages have stricter qualification criteria than conforming loans due to the higher loan amounts and increased lender risk:

• •Credit Score: Most lenders require a minimum credit score of 700, though some may accept 680 with compensating factors. Premium rates typically require 740+.
• •Down Payment: Expect to put down at least 10-20% of the purchase price. The higher your down payment, the better your rate. Many lenders prefer 20% down to avoid additional risk.
• •Debt-to-Income Ratio: Your DTI should typically be below 43%, though some lenders may allow up to 45% with strong compensating factors like significant assets.
• •Cash Reserves: Lenders typically require 6-12 months of mortgage payment reserves in savings or liquid assets after closing.
• •Income Documentation: Expect thorough income verification including W-2s, tax returns, pay stubs, and possibly bank statements. Self-employed borrowers may need 2 years of tax returns.
• •Appraisal: Due to the higher loan amount, some lenders require two full appraisals from different appraisers to verify the property value.

Conforming Loan Limits Explained

The FHFA adjusts conforming loan limits annually based on changes in the national average home price. These limits determine the maximum loan amount that Fannie Mae and Freddie Mac can purchase from lenders.

There are three tiers of conforming limits:

• •Standard Limit ($806,500): Applies to most counties in the continental United States where median home prices are at or below the national median.
• •High-Cost Area Limit ($1,209,750): Applies to counties where median home prices exceed the national average. These areas include expensive markets like San Francisco, Los Angeles, New York City, and Washington D.C.
• •Special Exceptions ($1,209,750): Alaska, Hawaii, Guam, and the U.S. Virgin Islands automatically receive the high-cost limit due to generally higher construction costs.

For properties with more than one unit (duplexes, triplexes, fourplexes), the conforming limits increase proportionally. For example, a two-unit property in a standard county has a limit of $1,032,450, while a four-unit property has a limit of $1,588,500.

Jumbo Loan Interest Rates

Jumbo mortgage rates have historically been 0.25% to 0.50% higher than conforming loan rates, though this spread can vary based on market conditions. As of December 2025, jumbo loan rates average around 6.40-6.43%. In some competitive markets with strong borrower profiles, jumbo rates may be comparable to or even lower than conforming rates.

Several factors influence your jumbo loan rate:

• •Credit Score: Borrowers with scores above 760 typically receive the best rates, while scores below 700 may see significant rate increases.
• •Loan-to-Value Ratio: Lower LTV ratios (higher down payments) generally result in better rates. An 80% LTV gets better rates than 90% LTV.
• •Cash Reserves: Having 12+ months of reserves can help you qualify for better rates compared to the minimum 6 months.
• •Property Type: Primary residences get the best rates, followed by second homes, then investment properties. Condos may have slightly higher rates than single-family homes.
• •Loan Amount: Super jumbo loans (typically $2M+) may have higher rates due to increased risk and portfolio constraints.

Advantages of Jumbo Loans

• •Higher Loan Amounts: Purchase luxury homes and properties in high-cost areas that exceed conforming limits.
• •Single Mortgage: Avoid the complexity of taking out multiple loans or a piggyback mortgage to finance an expensive property.
• •Competitive Rates: In recent years, jumbo rates have become increasingly competitive with conforming rates, especially for well-qualified borrowers.
• •No PMI: With 20% down, you avoid private mortgage insurance, saving money on monthly payments compared to high-LTV conforming loans.
• •Diverse Product Options: Many lenders offer adjustable-rate mortgages (ARMs), interest-only periods, and other flexible terms for jumbo loans.

Potential Drawbacks

• •Stricter Qualification: Higher credit score and income requirements can make qualifying more difficult.
• •Larger Down Payment: Coming up with 10-20% down on a $1M+ property means having $100,000-$200,000+ in cash available.
• •More Documentation: Expect a more thorough underwriting process with extensive documentation requirements.
• •Higher Interest Rates: While the gap has narrowed, jumbo rates are often slightly higher than conforming rates.
• •Larger Monthly Payments: The combination of a large loan amount and potentially higher rates results in significant monthly payments.
• •Limited Lender Options: Not all lenders offer jumbo loans, which may reduce your options for shopping rates.

Jumbo Loan vs. Conforming Loan

Understanding the key differences helps you determine which loan type is right for your situation:

How to Qualify for a Jumbo Loan

Follow these steps to improve your chances of qualifying for a jumbo mortgage:

1. 1. Check Your Credit: Review your credit reports from all three bureaus and dispute any errors. Aim for a score of 740+ for the best rates.
2. 2. Calculate Your DTI: Add up all monthly debt payments (including the new mortgage) and divide by gross monthly income. Target 43% or lower.
3. 3. Build Cash Reserves: Save enough to cover 12 months of mortgage payments plus your down payment and closing costs.
4. 4. Document Your Income: Gather 2 years of W-2s or tax returns, recent pay stubs, and bank statements showing consistent income and savings.
5. 5. Maximize Down Payment: The more you put down, the better. Aim for 20% to get the best rates and terms.
6. 6. Reduce Debt: Pay down credit cards, car loans, and other debts to lower your DTI ratio before applying.
7. 7. Shop Multiple Lenders: Compare offers from at least 3-5 lenders, including banks, credit unions, and mortgage brokers.
8. 8. Consider a Co-Borrower: Adding a spouse or partner with income can help you qualify for a larger amount.