Jumbo Loans

A jumbo loan is a mortgage used to finance properties that are too expensive for a conventional conforming loan. The maximum amount for a conforming loan is $647,200 in most counties, as determined by the Federal Housing Finance Agency (FHFA). Homes that exceed the local conforming loan limit require a jumbo loan.

Also called non-conforming conventional mortgages, jumbo loans are considered riskier for lenders because these loans can’t be guaranteed by Fannie Mae and Freddie Mac, meaning the lender is not protected from losses if a borrower defaults. Jumbo loans are typically available with either a fixed interest rate or an adjustable rate, and they come with a variety of terms.

Loan Requirements:

- Lenders may require your FICO score to be higher than 700, and sometimes as high as 720, to qualify for a jumbo loan.
- Lenders will also consider your debt-to-income ratio (DTI) to ensure you don’t become over-leveraged, though they may be more flexible if you have plentiful cash reserves. Some lenders have a hard cap of 45% DTI, however.
- The property you want to purchase must beabove the maximum amount for a conforming loan.

When should I choose this Loan?

When you wish to purchase homes that are much more expensive than normal mortgages allow for.

  • Jumbo loans allow for purchase of much bigger houses at the cost of higher rates, much stricter restrictions, and even higher fees and costs. They also require larger down payments. jumbo loans are for those financially well-off that are ready commit a good amount of cash for a large home purchase.

Why are Jumbo Mortgages treated differently?

A jumbo loan, or jumbo mortgage, is a mortgage loan that exceeds the limits set by the Federal Housing Finance Agency (FHFA). Jumbo loans are called non-conforming loans because they don’t conform to these limits.Since jumbo mortgages don’t have the guarantees that come with conforming loans, borrowers tend to be subject to greater scrutiny and may have higher borrowing costs. A jumbo loan may attract different investors than those who customarily buy conventional mortgage bonds.

Mortgages are originated by lenders, who immediately sell them to mortgage investors like Fannie Mae or Freddie Mac. However, Fannie and Freddie are only authorized to purchase mortgages that conform to the FHFA’s limits After buying these mortgages, Fannie and Freddie bundle them together with other, similar loans for sale to investors on the secondary mortgage market. A similar process often happens with jumbo mortgages, but different investors are involved.


  • Down Payment Requirement: Jumbo loans typically have much higher down payment requirements than conforming loans. It’s common to see lenders require 20% down on jumbo loans for single-family units. You may also need a higher down payment for second homes and multifamily units. Finally, the down payment required is based on your loan amount and credit score as well.

  • Credit Score Requirements: The exact credit score you’ll need to qualify for a jumbo mortgage will depend on the lender and the loan terms. Usually, the minimum requirement for a 30-year fixed on primary residences, vacation homes and investment properties is a 680 median FICOⓇ Score, though this can vary up to 760 depending on the property type and what you’re looking to do in your mortgage transaction.

  • Debt-To-Income Ratio: Jumbo Loans usually require a DTI of 45% or lower. A low DTI ratio is very important when you get a jumbo loan because it tells lenders that you will have enough cash flow to cover your mortgage payments. If you have a higher down payment or credit score, you may qualify for a jumbo loan with a higher DTI ratio.

Comparison with Conventional Mortgages





15% to 20%.


Less than 50%

Less than 45%





$647,200 in most areas; up to $970,800 in high-cost areas for a single unit

No Ceiling, but must be above the Conventional Mortgages limits.


Unable to purchase very expensive/large homes using Conventional Mortgages.

Much stricter lending requirements, higher rates, higher closing costs, and not backed by the FNMA/FRMC.

Can a Loan Officer Pre-Approve this Loan?

Like with all other Mortgages and loans, a Loan Officer can help you get Pre-Approved for a loan so the lending process can happen smoothly. Water Mortgage is here to help with all your Pre-Approval needs!

Get Pre-Approved for a Jumbo Loan Today!