What Exactly Is a Jumbo Loan?
If you’re looking to buy a higher-priced home, you might find that a conventional mortgage simply doesn’t cover enough of the purchase price. That’s where jumbo loans come in. A jumbo loan is a type of mortgage used to finance properties that exceed the conforming loan limits set by Fannie Mae and Freddie Mac.
In 2025, the conforming loan limit for most areas in the U.S. is $766,550 for a single-family home, though it can be higher in certain high-cost regions. If the amount you need to borrow is above that limit, you’ll need a jumbo loan.
Why Jumbo Loans Exist
Traditional, conforming loans are backed by government-sponsored entities (GSEs). This backing gives lenders confidence that they’ll be reimbursed if a borrower defaults. Jumbo loans, however, don’t have that backing — which is why they have stricter requirements.
Despite the name, a jumbo loan isn’t only for millionaires. Anyone purchasing a home that exceeds the conforming loan limit might need one, especially in competitive markets where home prices are higher.
Who Should Consider a Jumbo Loan
A jumbo loan might be right for you if:
- You’re Buying a High-Value Home: If your dream home’s price exceeds conforming limits, a jumbo loan bridges the gap.
- You Have Strong Financials: Lenders will typically want a higher credit score (usually 700+), a low debt-to-income ratio, and proof of steady income.
- You Have Cash for a Down Payment: Expect to put down at least 10–20% of the purchase price, though some lenders may offer more flexible options.
Key Requirements for Jumbo Loans
Because lenders take on more risk with jumbo loans, they look for financially solid borrowers. Here’s what they’ll usually require:
- Credit Score: Often 700 or higher for the most competitive rates.
- Debt-to-Income Ratio (DTI): Usually below 43%, though lower is better.
- Documentation: More paperwork than a conventional loan — including proof of assets, income, and reserves.
- Appraisal: In some cases, two appraisals may be required for very high-value homes.
Pros and Cons of Jumbo Loans
Like any mortgage option, jumbo loans have their upsides and trade-offs.
Advantages:
- Lets you buy the home you want, even if it exceeds conforming limits
- Competitive interest rates for qualified borrowers
- Can be used for primary homes, vacation properties, or investment properties
Challenges:
- Stricter credit and income requirements
- Larger down payment needed
- Higher closing costs in some cases
How Lendgo Makes It Easier
Shopping for a jumbo loan can feel intimidating, but Lendgo simplifies the process. Instead of contacting lenders one by one, you can:
- Compare Jumbo Loan Offers Side by Side: See who offers the most competitive rates and terms
- Check Your Affordability Instantly: Use our [Mortgage Calculator] to figure out your budget before you shop
- Get Pre-Approved Quickly: Position yourself as a strong buyer in a competitive market
Get Your Free Jumbo Loan Quote Today
Next Steps
If you’re considering a jumbo loan, preparation is key. Make sure your finances are in order, check your credit score, and gather your documentation early. Then, let Lendgo connect you with lenders ready to compete for your business.
Buying a higher-priced home doesn’t have to mean a complicated mortgage process — with the right tools and the right lender, you can make your next big move confidently.
