Jumbo Mortgage Oveview
- Types of Mortgage Based on Loan Amount
- Conforming mortgage: In the 48 contiguous states, Washington D.C. and Puerto Rico, this is a mortgage with a loan amount of $453,100 or less. In Alaska, Guam, Hawaii and the U.S. Virgin Islands this is a mortgage with a loan amount of $679,650 or less
- Conforming jumbo mortgage: Also called a super conforming mortgage, this is a mortgage with a loan amount greater than $453,100 (or $679,650 in Alaska, Guam, Hawaii or the U.S. Virgin Islands) but less than the loan limit set by the government for high cost areas (counties with higher average home prices)
- Jumbo mortgage: Also known as a non-conforming jumbo loan, a jumbo mortgage is a mortgage with a loan amount that exceeds the loan limit in a county
- Use our CONFORMING MORTGAGE LIMIT CALCULATOR to determine the conforming loan limit for any county
The size of your mortgage impacts many factors including your interest rate, borrower mortgage qualification guidelines and lender requirements. Below, we outline the three mortgage size categories: conforming mortgage, conforming jumbo mortgage (also called a super conforming mortgage) and jumbo mortgage and review the loan limits that apply to each category. We also review the key differences between jumbo and non-jumbo loans. The better you understand how jumbo mortgages work the more likely you are to find the jumbo mortgage that is right for you.
As outlined below, mortgages fall into three categories depending on the size of the loan:
The table below outlines the conforming loan limits for general and high cost areas in the U.S. and selected territories. A mortgage amount that is greater than the limits presented in the table is a jumbo mortgage. Please note that conforming loan limits vary by county.
|Conforming Loan Limits – Maximum Original Principal Balance|
- Jumbo Mortgage Rates
- Differences Between Jumbo and Non-Jumbo Mortgages
- Use the FREEANDCLEAR LENDER DIRECTORY to find lenders in your state that offer jumbo mortgages
The interest rate you pay on a jumbo mortgage depends on several factors including your credit score, loan-to-value (LTV) ratio, loan term and mortgage type. Regardless of mortgage type -- fixed rate, adjustable rate mortgage or interest only -- a borrower should expect the interest rate for a jumbo mortgage to be .125% to .375% higher than the interest rate for a non-jumbo loan. Historically this has been the case; however, over the past several years the interest rates for jumbo and conforming loans have been approximately the same for certain mortgage programs over certain periods of time.
Borrowers also see more variation in interest rate pricing and terms for jumbo mortgages as lenders have more flexibility in setting pricing and borrower qualification guidelines for jumbo loans than they do for conforming mortgages. This dynamic creates more competition between jumbo mortgage lenders. Jumbo mortgages are provided by traditional lenders such as banks, mortgage banks, mortgage brokers and credit unions. Borrowers can benefit from this competition by shopping multiple lenders to find the jumbo mortgage with the lowest interest rate and closing costs. Click on lenders in the table below or INTEREST RATES to compare jumbo mortgage interest rates.
Loan-to-Value Ratio (LTV) Requirement for Jumbo Mortgages
Historically lenders have typically imposed stricter limits on the maximum loan-to-value (LTV) ratio for jumbo mortgages. The LTV ratio is the ratio of the mortgage amount to the value of the property you are financing. In the past, for jumbo loans, lenders have typically required a maximum LTV ratio of 80% or even as low as 60% in some cases, depending on the loan amount, type of loan and mortgage program. For example, a lender may have been willing to lend you $2 million but required a maximum LTV ratio of 60% in order to receive the lowest interest rate from the lender, so you were required to make a down payment of at least 40% of the property purchase price.
Since 2014, however, some lenders have relaxed their guidelines for jumbo mortgages and now permit a maximum LTV ratio of 85% or 90% in some cases, although borrowers may pay a higher interest rate at higher LTV ratio levels. Please note the higher LTV ratio usually applies to jumbo purchase mortgages while lenders apply a lower LTV ratio to jumbo refinancings and an even lower LTV ratio for jumbo cash-out refinancings.
By comparison, for conforming loans, lenders will typically offer you their lowest interest rate if the LTV ratio is 80% or lower and borrowers are able to obtain mortgages with an LTV ratio of 97% or even 100% in the case of the VA and USDA mortgage programs.
Credit Score Requirement for Jumbo Mortgages
Borrower credit score requirements for jumbo mortgages are usually higher than for conforming mortgages. Lenders typically require that jumbo mortgage borrowers have a minimum credit score of 700- 720 to receive their best mortgage terms although some lenders may permit lower credit scores. Lenders may apply lower LTV ratio and borrower debt-to-income ratio requirements for jumbo mortgage borrowers with lower credit scores which can make it more challenging to qualify for a loan.
Borrower Reserve Requirements for Jumbo Mortgages
Many jumbo lenders require that borrowers have six-to-nine months of total monthly housing expense (mortgage payment, property tax, homeowners insurance plus other applicable housing-related expenses) as savings in reserve when the mortgage closes. The borrower reserve requirement varies by lender, loan amount, loan type and mortgage program. Borrowers with lower credit scores may be required to have higher reserves. Be sure to understand a lender's reserve requirement for a jumbo mortgage to ensure that you have sufficient funds to qualify for the mortgage.
Mortgage Program Eligibility for Jumbo Mortgages
There are other differences between jumbo and conforming mortgages that borrowers should be aware of. Most government-backed low or no down payment mortgage programs such as the FHA and VA home loan programs only apply to mortgage amounts below the loan limit so jumbo mortgages are not eligible for these programs. Most conventional low or no down payment mortgage programs such as Fannie Mae's HomeReady Mortgage Program and 3% Down Payment / 97% LTV mortgage program only apply to mortgage amounts below the conforming loan limit so jumbo mortgages are also not eligible for these programs.