Jumbo Mortgage Guide: Rates, Requirements, and Tips

Jumbo mortgages are loans that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). In 2026, that means any loan above $766,550 in most areas—or up to $1,149,825 in high-cost areas.

Buying a luxury home or in an expensive market? You'll likely need a jumbo loan. This guide covers everything you need to know: current limits, rates, requirements, and insider strategies to qualify for the best terms.

What Is a Jumbo Mortgage?

A jumbo mortgage is any home loan that exceeds the conforming loan limits established by the FHFA. These loans are called "jumbo" because they're too large for Fannie Mae and Freddie Mac to purchase, meaning lenders take on more risk.

Key characteristics:

• Loan amount exceeds conforming limits
• Not backed by Fannie/Freddie
• Stricter qualification requirements
• Typically slightly higher rates (0.25%-0.50% more)
• Larger down payments often required

2026 Jumbo Loan Limits

Standard Conforming Limit

• Most of the U.S.: $766,550
• Any loan above this is jumbo

High-Cost Area Limits

• High-cost counties: $1,149,825 (150% of baseline)
• Examples: San Francisco, Los Angeles, New York City, Seattle, Washington DC

Check your county: FHFA County Loan Limit Map

Examples by Market:

Standard areas (most of the country):

• Conforming: Up to $766,550
• Jumbo: $766,551+

High-cost areas (San Francisco, Manhattan, etc.):

• Conforming: Up to $1,149,825
• Jumbo: $1,149,826+

Super jumbo (terminology varies):

• Loans $2M-$5M+
• Even stricter requirements
• Highly customized terms

Jumbo Mortgage Rates in 2026

Jumbo rates used to be significantly higher than conforming rates. In recent years, the gap has narrowed.

Typical rate comparison (February 2026):

• Conforming 30-year fixed: 6.50%-7.00%
• Jumbo 30-year fixed: 6.625%-7.25%
• Difference: 0.125%-0.50% higher for jumbo

Why the gap is smaller now:

• Lenders portfolio jumbo loans (keep them vs. selling)
• Jumbo borrowers have excellent credit and assets
• Lower default rates than conventional wisdom suggested
• Competition among lenders

Rate factors:

• Credit score (740+ required for best rates)
• Down payment (20%+ for best rates)
• Debt-to-income ratio (lower is better)
• Cash reserves (more is better)
• Property type (primary residence gets best rates)

Jumbo Loan Requirements

Jumbo lenders are stricter because they hold more risk. Expect higher standards across the board.

Credit Score

• Minimum: 680-700 (lender dependent)
• Competitive: 720+
• Best rates: 760+

Reality: Most jumbo borrowers have 740+ credit scores.

Down Payment

• Minimum: 10%-20% depending on lender
• Standard: 20%
• Best rates: 25%-30%
• Super jumbo ($2M+): 30%+ often required

No PMI option: Most jumbo lenders don't offer PMI, so 20% down is essentially required.

Second homes and investment properties: 25%-30% minimum.

Debt-to-Income Ratio (DTI)

• Maximum: 43%-45%
• Competitive: 38%-40%
• Preferred: Under 36%

Front-end DTI (housing costs only): Typically under 28%-30%

Calculation:

• All monthly debt payments ÷ gross monthly income
• Includes: mortgage, property tax, insurance, HOA, car loans, credit cards, student loans, etc.

Income and Employment

• W-2 employees: 2 years same employer or field
• Self-employed: 2 years tax returns showing stable/increasing income
• Documentation: Extensive—W-2s, tax returns, profit & loss statements, bank statements

Income stability matters more than amount. Lenders want to see consistent, verifiable income.

Cash Reserves

This is where jumbo loans differ most from conforming.

Typical requirements:

• Standard jumbo: 6-12 months reserves
• Large jumbo ($1.5M+): 12-24 months reserves
• Super jumbo ($3M+): 24+ months reserves

What counts as reserves:

• Savings accounts
• Checking accounts
• Investment accounts (stocks, bonds, mutual funds)
• Retirement accounts (401k, IRA at 70% value)
• Proceeds from asset sales

What doesn't count:

• Equity in other properties (usually)
• Future bonuses or commissions
• Unsecured credit

Example:

• $1.5M loan
• Monthly payment: $10,000 (PITI)
• 12 months reserves required: $120,000 in liquid assets AFTER down payment and closing costs

Property Requirements

• Appraisal: Always required, often more rigorous
• Second appraisal: Some lenders require two appraisals on jumbo loans
• Property condition: Must be in good condition
• Property type:
  • Single-family: Easiest
  • Condo: More scrutiny (HOA financials reviewed)
  • Multi-unit: Possible but stricter
  • Land/lots: Very difficult

Documentation

Expect to provide:

• 2 years tax returns (personal and business if self-employed)
• 2 years W-2s
• 2+ months bank statements (all accounts)
• Investment account statements
• Retirement account statements
• Profit & loss statement (self-employed)
• CPA letter (self-employed, sometimes)
• Gift letter (if down payment includes gifts)
• Explanation letters (for any credit issues, large deposits, etc.)

Jumbo underwriting is thorough. Be prepared to explain everything.

Types of Jumbo Mortgages

Fixed-Rate Jumbo Mortgages

• 30-year fixed: Most common
• 20-year fixed: Available
• 15-year fixed: Lower rates, higher payments
• 10-year fixed: Rare but available

Best for: Borrowers who value stability and plan to hold long-term.

Adjustable-Rate Jumbo Mortgages (ARMs)

• 7/1 ARM: Fixed 7 years, adjusts annually after
• 10/1 ARM: Fixed 10 years, adjusts annually after
• Initial rate: 0.5%-1% lower than fixed

Best for: Borrowers who plan to move or refinance within 7-10 years.

Interest-Only Jumbo Loans

• Pay only interest for initial period (5-10 years)
• Lower payments initially, then adjust to principal + interest
• Higher risk - no equity buildup during interest-only period
• Less common post-2008

Best for: High-net-worth individuals with investment strategies, expecting bonuses, or planning to sell soon.

Portfolio Jumbo Loans

• Lender keeps the loan (doesn't sell to investors)
• More flexibility on terms and requirements
• Rates can be better or worse depending on lender

Best for: Unique situations that don't fit standard guidelines.

How to Qualify for a Jumbo Mortgage

Step 1: Check Your Credit

• Pull credit reports from all 3 bureaus
• Dispute any errors
• Pay down credit card balances
• Goal: 760+ for best rates

Quick wins:

• Pay down cards to under 10% utilization
• Don't close old accounts
• Don't open new accounts before applying

Step 2: Calculate Your DTI

• Add up all monthly debt payments
• Divide by gross monthly income
• Goal: Under 40%

If DTI is too high:

• Pay off smaller debts
• Increase income (second job, side business)
• Consider smaller loan amount

Step 3: Build Cash Reserves

• Calculate required reserves (12-24 months of payments)
• Add down payment + closing costs
• Total cash needed: Can be substantial

Example:

• $1.2M loan, 20% down
• Down payment: $240,000
• Closing costs: ~$30,000
• 12 months reserves: $90,000 (assuming $7,500/month payment)
• Total: $360,000 cash needed

Step 4: Organize Documentation

Create a folder with:

• Tax returns (2 years)
• W-2s (2 years)
• Pay stubs (2 months)
• Bank statements (2-3 months, all accounts)
• Investment statements
• Retirement statements
• Explanation letters for anything unusual

Pro tip: Organize ahead of time. Jumbo underwriters request a lot.

Step 5: Get Pre-Approved

• Not pre-qualified—pre-approved
• Lender reviews full documentation
• Gives you real borrowing power number
• Makes offers stronger

Step 6: Shop Lenders

• Compare at least 3-5 jumbo lenders
• Banks, credit unions, online lenders all offer jumbo loans
• Rates and terms vary significantly
• Don't just go with your current bank

Where to Get a Jumbo Mortgage

National Banks

• Chase, Wells Fargo, Bank of America, Citi
• Competitive rates
• Streamlined process
• May have relationship discounts

Regional Banks

• Often competitive on jumbo loans
• More personalized service
• May be more flexible on unique situations

Credit Unions

• Sometimes offer excellent jumbo rates
• Must be a member
• Can be more flexible

Online Lenders

• Better.com, SoFi, Rocket Mortgage
• Competitive rates
• Convenient digital process
• Less hand-holding

Mortgage Brokers

• Access to multiple lenders
• Can shop for best rate
• Good for complex situations
• May charge fees

Recommendation: Get quotes from 2-3 banks + 1-2 online lenders + 1 broker.

Jumbo Loan Costs and Fees

Origination Fees

• Typically 0.5%-1% of loan amount
• On $1M loan: $5,000-$10,000

Appraisal

• $600-$1,500 for standard
• $1,500-$5,000 for luxury/unique properties
• Second appraisal: If required, add another $600-$1,500

Total Closing Costs

• Typically 2%-5% of loan amount
• On $1M loan: $20,000-$50,000

Higher than conforming loans because:

• Larger loan amounts (fees are percentage-based)
• More rigorous appraisals
• Additional title insurance costs

Jumbo Mortgage Strategies

Strategy 1: Increase Down Payment to Lower Rate

• 20% down: Standard rate
• 25% down: ~0.125% better rate
• 30% down: ~0.25% better rate

Is it worth it?

• On $1M loan, 0.25% rate difference = ~$140/month
• To get that, you'd put down extra $50,000
• Payback: $50,000 ÷ $140 = 357 months (30 years)
• Probably not worth it unless you have excess cash

Strategy 2: Pay Points to Lower Rate

• 1 point (1% of loan) typically buys ~0.25% rate reduction
• On $1M loan: $10,000 buys 0.25% lower rate
• Saves ~$140/month
• Break-even: ~6 years

Worth it if: You plan to keep the loan 6+ years.

Strategy 3: Use ARM for Short-Term Holding

• 7/1 or 10/1 ARM can be 0.5%-1% lower rate
• On $1M loan: $300-$600/month savings
• Risk: Rate adjusts after fixed period

Worth it if: You're certain you'll move or refinance within 7-10 years.

Strategy 4: Split into Conforming + Second Loan

• First mortgage: $766,550 (conforming limit)
• Second mortgage: Remaining amount (HELOC or home equity loan)
• Avoids jumbo requirements on first loan

Example:

• $1M purchase, 20% down
• First loan: $766,550 (conforming rate)
• Second loan: $33,450 (higher rate but small amount)

Pros: Lower rate on larger portion

Cons: Two payments, second loan has higher rate, more complex

When it works: When conforming rates are much better than jumbo rates (less relevant in 2026).

Strategy 5: Maximize Relationship Discounts

• Some banks offer 0.125%-0.50% rate discount for:
  • Banking relationship
  • Investment accounts
  • Certain account balances

Worth it if: Discount is significant and you were going to bank there anyway.

Strategy 6: Buy in High-Cost Area (If Possible)

• Conforming limit in high-cost areas: $1,149,825
• Avoids jumbo designation
• Gets conforming rates and terms

Example: $1.1M loan in San Francisco = conforming. Same loan in Phoenix = jumbo.

Jumbo Mortgage for Self-Employed Borrowers

Self-employed borrowers face extra scrutiny on jumbo loans.

Requirements:

• 2 years tax returns (personal and business)
• Profit & loss statement (YTD)
• Business license
• CPA letter (sometimes)

Income Calculation:

Lenders average your net income (after expenses) from tax returns.

Challenge: Many self-employed people write off expenses, reducing taxable income—and qualifying income.

Solution:

• Bank statement loans - Qualify based on deposits, not tax returns (see separate article)
• Asset depletion loans - Qualify based on assets
• Minimize write-offs the 2 years before applying

Self-Employed Jumbo Tips:

• Work with lender experienced in self-employed jumbo loans
• Provide strong documentation
• Show consistent or increasing income
• Have larger reserves (18-24 months)

Investment Property Jumbo Loans

Buying a jumbo investment property? Expect stricter terms.

Requirements:

• 30% down minimum (some lenders require 35%-40%)
• Higher rates (0.5%-1% more than primary residence)
• More reserves (12-18 months)
• Lower DTI (often 40% max)
• Rental income: Only 75% counts toward qualifying income

Strategy:

If you can designate as "second home" instead of investment (and meet occupancy requirements), you get better terms.

Common Jumbo Mortgage Mistakes

1. Not shopping enough lenders - Jumbo rates vary widely
2. Underestimating reserve requirements - Running out of cash after closing
3. Waiting until last minute to organize docs - Delays closing
4. Not improving credit first - Small credit score boost = big rate savings
5. Assuming you won't qualify - Standards are strict but achievable
6. Overlooking ARMs - Can save significantly if you're not staying long-term
7. Not considering portfolio lenders - May have more flexibility
8. Ignoring relationship discounts - Free money on the table

Jumbo Mortgage vs. Conforming Loan

Is a Jumbo Mortgage Right for You?

Get a jumbo mortgage if:

• You're buying above conforming limits
• You have excellent credit (740+)
• You have 20%+ down payment
• You have significant cash reserves
• Your DTI is under 43%
• Your income is stable and well-documented

Consider alternatives if:

• Your credit is below 700
• You don't have 20% down
• Cash reserves are tight
• Your income is hard to document
• DTI is above 45%

Alternatives:

• Wait and improve credit/savings
• Buy less expensive home
• Bank statement loan (self-employed)
• Portfolio loan with more flexible terms

Bottom Line

Jumbo mortgages have evolved significantly since the 2008 financial crisis. Today's jumbo loans are more accessible, more competitively priced, and—for qualified borrowers—not dramatically different from conforming loans.

Keys to success:

1. Excellent credit - 760+ gets you the best rates
2. Substantial reserves - 12-24 months of payments in the bank
3. Low DTI - Under 40% is ideal
4. Strong documentation - Organize everything upfront
5. Shop aggressively - Rates vary significantly between lenders

Rate environment matters: When jumbo-conforming spread is narrow (like 2024-2026), jumbo loans are highly competitive. When spreads widen, they become less attractive.

If you're buying a luxury home or in a high-cost market, don't let the "jumbo" label intimidate you. With proper preparation and the right lender, you can secure competitive terms and achieve your homeownership goals.

The jumbo mortgage market is competitive, sophisticated, and more borrower-friendly than ever. Take advantage of that competition by shopping widely, negotiating aggressively, and choosing the loan structure that best fits your financial situation and timeline.

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