- Make sure you qualify. You must clear three hurdles to qualify for a jumbo loan: a high income requirement, a stellar credit score and hefty reserves. Falling short in one of those categories will make it harder to land the best rate.
- Shop around. Because jumbo loans aren’t as readily available as conforming loans, finding the best deal might take a bit more effort. Broaden your search to include brick-and-mortar lenders and mortgage brokers.
- Expect a bit of extra scrutiny. Jumbo lenders are taking a big risk, so they might spend a bit more time examining your income, verifying your cash reserves and generally vetting your finances.
What is a jumbo loan?
These conforming loans are those that can be serviced by Fannie Mae and Freddie Mac. Because a jumbo loan exceeds these limits, it’s also called a non-conforming loan.
When you get a jumbo mortgage, your lender can’t rely on federally-backed insurance from Freddie and Fannie to reduce some of their risks. Many of the home loan programs provided by the government operate under the principle that lenders will be able to recoup some of their losses if a borrower defaults. At the very least, lenders know they can sell their loans to these government-sponsored enterprises, in part, to promote liquidity in the home loan market.
When should you consider a jumbo mortgage?
If you’re buying a high-priced house, and you’re able to qualify, a jumbo mortgage can be a good deal. For jumbo loans, lenders typically demand a stellar credit score, a spotless credit history and a down payment of 20 percent or more.
Jumbo loan requirements and qualifications
Each year, the Federal Housing Finance Agency reviews home prices to determine the conforming loan limit. The ceiling is based on home price increases, as well as where the homes are located, usually by county. Any mortgage above the conforming loan amount is considered a non-conforming loan – a jumbo loan. For 2022, the limit for most conforming loans is $647,200. However, there are some areas of the country that have a higher conforming loan limit – amounts up to 
$970,800 in the most expensive areas.
Keep in mind: the sale price of the property doesn’t really affect whether or not you need to get a jumbo loan; it’s all about how much you have to borrow. So, you can purchase a multimillion-dollar home, and if you only finance a small portion of it (below the limit in your area) you can still get a conforming mortgage.You can find the non-conforming loan limits for every state and county here.
Before you apply for a high-dollar mortgage, find out if you live in one of those high-cost areas. The FHFA offers an interactive map of all the counties in the United States, along with the conforming limits in those counties. If your mortgage exceeds the conforming loan limit, it’s a jumbo loan, and you’ll need to take that into account as you move forward.
When lenders make conforming mortgages, they know that they can sell the loans to Fannie and Freddie and offload some of the risks. However, with a non-conforming loan, that option isn’t available, so jumbo mortgage lenders often have stricter requirements for jumbo borrowers. These can include:
- A higher credit score than might be required for a conforming loan
- 20 percent minimum down payment
- Better debt-to-income ratio
What are the benefits of a jumbo loan?
The main benefit for borrowers is that a jumbo mortgage lets you borrow more than the limits imposed by Fannie and Freddie. For instance, if you’d like to borrow $1 million against a $1.5 million home, a jumbo loan makes it possible.