What is a Jumbo Loan?


A jumbo loan, also known as “non-conforming,” is one that typically is larger than $484,350, and exceeds the limits set by Fannie Mae and Freddie Mac, the two government-sponsored organizations that buy mortgages from lenders. Because jumbo loans cannot be funded by these two agencies, they usually carry higher interest rates. In general, jumbo loans often are used for large, single-family homes.

Key Aspects to Remember:

  • Jumbo loans can be fixed-rate or adjustable rate.
  • Private mortgage insurance (PMI) is not available with a jumbo mortgage. Therefore, required down payments are higher and often the borrower’s credit score must be at least 680.
  • The maximum debt-to-income ratio for jumbo loan borrowers is 43 percent.
  • Jumbo loans carry higher interest rates than conforming loans and often have more stringent underwriting and larger down payment requirements.
  • Given the size of a jumbo loan, it may be more expensive to refinance, primarily because of higher closing costs


How much house can you afford? Find out with our Mortgage Calculator.

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