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What is a Jumbo Mortgage?

What is a Jumbo Mortgage?

  • Jumbo Mortgage Overview
  • In short, a jumbo mortgage is any loan amount that exceeds the conforming loan limit for a county.  The conforming loan limit is established each year by several mortgage organizations including the Federal Housing Finance Agency (FHFA).  The conforming loan limit impacts mortgage program eligibility and the types of loans that lenders offer borrowers. The size of your loan and whether it is a jumbo mortgage is important for multiple reasons.  Your loan amount affects your mortgage rate, closing costs, borrower qualification requirements and mortgage program eligibility, especially for no or low down payment programs.  Simply put, a different set of guidelines apply to jumbo mortgages.  Plus, not all lenders offer jumbo loans.

    While the difference between jumbo and conforming mortgages can be relatively moderate, it is important for borrowers to understand how loan size impacts getting a mortgage.  The better you understand how jumbo mortgages work the more likely you are to find the loan that is right for you.

  • Types of Mortgage Based on Loan Amount
  • The difference between jumbo and non-jumbo loans is not exactly black and white because the conforming loan limit varies by county.  The conforming loan limit also varies by the number of units in the property with the more units, the higher the loan limit, up to four units.  There is a general conforming loan limit but counties with higher housing costs have higher conforming limits.  This is relevant because some lenders and mortgage programs apply the general conforming loan limit to determine if a loan is classified as a jumbo mortgage while other lenders and programs use the high cost loan limit for more expensive counties as the determining factor.

    As a result, mortgages fall into three categories depending on loan size: conforming, conforming jumbo (also known as super conforming) and jumbo. Below, we outline the three mortgage size categories and review the loan limits that apply to each category.  It is important that borrowers work with their lender at the beginning of the mortgage process to understand how their loan is classified and how that impacts their mortgage rate, closing costs and borrower qualification requirements.

    • Conforming mortgage: In the 48 contiguous states, Washington D.C. and Puerto Rico, this is a mortgage with a loan amount below the general conforming loan limit which is $453,100 or less for a single unit property.  In Alaska, Guam, Hawaii and the U.S. Virgin Islands this is a mortgage with a loan amount of $679,650 or less for a single unit property.  The general conforming loan limit is higher for multi-unit properties.
    • Conforming jumbo mortgage: Also called a super conforming mortgage, this is a mortgage with a loan amount greater than the general conforming loan limit but less than the loan limit for high cost areas (counties with higher average home prices).  The maximum high cost conforming loan limit for a single unit property in the contiguous United States, Washington D.C. and Puerto Rico is $679,650 and the high cost limit in in Alaska, Guam, Hawaii or the U.S. Virgin Islands is $1,019, 475.  The conforming loan limit for some counties is between the general and maximum high cost conforming loan limit.
    • Jumbo mortgage: Also known as a non-conforming jumbo loan, a jumbo mortgage has loan amount that exceeds the conforming loan limit for a county, including the high cost loan limits. 

    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 loan limits vary by county.

  • Conforming Loan Limits – Maximum Original Principal Balance
    Number of Units Contiguous United States, District of Columbia,
    and Puerto Rico
    Alaska, Guam, Hawaii, and the U.S. Virgin Islands
      General High Cost General High Cost
    1 $453,100 $679,650 $679,650 $1,019,475
    2 $580,150 $870,225 $870,225 $1,305,325
    3 $701,250 $1,051,875 $1,051,875 $1,577,800
    4 $871,450 $1,307,175 $1,307,175 $1,960,750
  • The Difference Between Conforming and Jumbo Loans
  • As noted above, your loan amount is one of several factors, including your credit score, loan-to-value (LTV) ratio, loan term and mortgage type, that determines your mortgage rate.  Regardless of loan type -- fixed rate, adjustable rate mortgage or interest only -- borrowers should expect jumbo mortgage rates to be .125% to .375% higher than conforming interest rates.  In the past, lenders had assigned a higher risk level to larger loans so jumbo mortgage rates included a minor pricing premium.

    Over the last several years, however, the rates for jumbo and conforming loans have been approximately the same for certain programs for long periods of time. This is because jumbo loan borrowers have been viewed as less risky and more attractive to lenders so jumbo mortgage rates fell in line with conforming rates and even dipped lower on several occasions.

    It is important to note that lenders have more flexibility in setting loan terms and qualification guidelines for jumbo mortgages as compared to conforming loans.  This results in greater variation in jumbo mortgage rates and provides more reason for borrowers to compare multiple mortgage quotes.  Jumbo mortgages are provided by traditional lenders such as banks, mortgage banks, mortgage brokers and credit unions.

    The table below compares rates and fees for jumbo mortgages.  Because there tends to be a wider range in jumbo mortgage terms we recommend that you contact multiple lenders to find the loan with the lowest mortgage rate and closing costs.  Shopping for your mortgage is the best way to save money on your loan.

  • Rate Details*
    Loan Program:  
    Monthly Payment:  
    Points  More Info:
    Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
    Total Lender Fees:  
    Loan type:  
    Property Value:  
    Loan to Value:  
    Credit Rating:  
    Date Submitted:  
    Monthly Housing Payments
    P & I More Info
    Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance.
    Mortgage Insurance More Info
    Mortgage Insurance: The monthly cost for a policy that protects the lender in case you’re unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%.
    Property Tax More Info
    Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ...
    Homeowner Insurance More Info
    Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ...
    Homeowner Association Fee More Info
    Homeowner Association fee: (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs.
    (If Any)
    Total Monthly Housing Payments
    Lender Fees
    Points More Info
    Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
    Origination Fee More Info
    Origination Charge: A loan origination charge is a fee charged by the lender for evaluating, processing, and closing the loan.
    Credit Report Fee More Info
    Credit Report Fee: Fee charged to obtain an applicant’s credit history prepared by one or all of the three major credit bureaus. Used by lender to determine the borrower’s creditworthiness.
    Tax Service Fee More Info
    Tax Service Fee: A fee charged by the lender to cover the cost of retaining a tax service agency. These agencies monitor the property tax payments on the property and report the results to the lender.
    Processing Fee More Info
    Processing Fee: A processing fee is a charge by the lender for clerical items associated with the loan. Examples of processing include loan set up, organization of loan conditions for underwriting, and preparing required disclosures for the borrower.
    Underwriting Fee More Info
    Underwriting Fee: A fee charged by the lender to verify information on the loan application, authenticate the property’s value, and perform a risk analysis on the overall loan package.
    Wire Transfer Fee More Info
    Wire Transfer Fee: In most cases lenders wire funds to escrow companies to fund a loan. Commercial banks that perform this function will charge the lender so the fee is generally passed on to the borrower.
    (If Any)
    FHA Upfront Premium More Info
    FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception.
    (If any)
    VA funding Fee (If any)
    Flood Fee
    Other Fees More Info

    Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees)

    The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower’s attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services.

    Total Lender Fees
    *Actual rates and other information may vary. Sponsored results shown only include participating lenders. The information you enter on this page will only be shared with lenders you choose to contact, either by calling the phone number or requesting a quote.
    Current Jumbo Mortgage Rates as of December 11, 2018
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    • APR
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    Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Click here for more information on rates and product details.
  • Jumbo Mortgage Qualification Requirements
  • The borrower qualification requirements for jumbo mortgages tend to be stricter than for conforming loans.  In general, jumbo loans require a larger down payment and lower loan-to-value (LTV) ratio, higher borrower credit score and greater borrower reserves.  This makes it more challenging to qualify for a jumbo mortgage. 

    Loan-to-Value (LTV) Ratio

    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 loan amount to the value of the property you are financing. In the past, for jumbo mortgages, lenders have typically applied 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 mortgage rate, so you were required to make a down payment of at least 40%.

    Since 2014, however, some lenders have relaxed their qualification guidelines for jumbo mortgages and now allow LTV ratios up to 85% or 90% in some cases, although borrowers may pay a higher mortgage rate at higher LTV ratios. Please note that the higher LTV ratio limit usually applies to jumbo purchase mortgages while lenders apply a lower LTV ratio to refinances and an even lower limit for jumbo cash-out refinances.

    By comparison, for conforming loans, lenders typically offer you their lowest mortgage rate if the LTV ratio is 80% or lower and borrowers are able to obtain loans with an LTV ratio of 97% or even 100% in the case of the VA and USDA mortgage programs.

    Credit Score

    Borrower credit score requirements for jumbo mortgages are usually higher than for conforming loans. Lenders typically require that jumbo mortgage borrowers have a minimum credit score of 700- 720 to receive their best loan terms although some lenders may permit lower credit scores.  Lenders may apply lower LTV ratio and borrower debt-to-income ratio guidelines for borrowers with lower credit scores which can make it more challenging to qualify for a jumbo mortgage.

    Borrower Reserve Requirements

    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 loan 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 loan.

    Use the FREEandCLEAR Lender Directory to find top-rated lenders that offer jumbo mortgages.


  • Mortgage Program Eligibility
  • Most no or low down payment mortgage programs including the HomeReady, Fannie Mae 3% Down / 97% LTV ratio, FHA and VA programs only allow loan amounts below the conforming loan limit so jumbo mortgages are not eligible for these programs. In some cases borrowers may choose to get a second mortgage so that their first mortgage does not exceed the conforming loan limit.  For example, if you need a $500,000 mortgage to buy a home but your loan program only permits loans below the conforming limit you could get a $453,000 first mortgage and a $47,000 second mortgage for total loan proceeds of $500,000.  In this case, using a second mortgage allows borrowers, who needs a jumbo loan, to reduce their first mortgage so that they are eligible for certain programs.


    Conforming Loan Limits:

About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael


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