Jumbo Loans: Financing a Home Above the Conforming Limit

What a jumbo loan is

A jumbo loan is a conventional mortgage larger than the conforming loan limit, the maximum loan amount Fannie Mae and Freddie Mac will buy. Because those two companies can’t buy a jumbo loan, the lender keeps it or sells it to private investors, and sets its own standards for approving it.

Where the limit comes from

The Federal Housing Finance Agency (FHFA) sets the conforming loan limit every year, based on home prices. The limit is higher in high-cost counties and in Alaska, Hawaii, Guam and the U.S. Virgin Islands. If your loan amount is above the limit for your county, you need a jumbo loan.

Look up the current limit for any county on FHFA’s conforming loan limit page.

The old limits are long gone. Older articles quote conforming limits in the $400,000s or $500,000s. The limit has risen most years since, so a loan that was “jumbo” a few years ago may be conforming today. Check FHFA’s page before assuming you need a jumbo loan.

What jumbo lenders look for

A jumbo loan is a bigger risk for the lender, so expect a closer look at your finances than with a conforming loan:

• Credit. Jumbo lenders generally want stronger credit than conforming loans require.
• Down payment. Expect to put down more than the conforming minimum. The exact amount depends on the lender, the loan size and the property.
• Cash reserves. Many lenders want to see several months of mortgage payments in savings after closing.
• Debt-to-income ratio. Your monthly debts compared with your gross monthly income, often held to a tighter standard.
• Documented income. Tax returns, W-2s and, for self-employed borrowers, business records.
• Appraisal. Some jumbo loans require a second appraisal to confirm the home’s value.

Requirements vary from lender to lender, which is why it pays to talk to a loan officer early.

Jumbo vs. two loans

Some buyers combine a conforming first mortgage with a second loan for the amount above the limit, instead of one jumbo loan. That can make sense in some cases, but a second loan usually costs more and adds a second payment. A loan officer can price both so you can compare.

Is a jumbo loan right for you?

A jumbo loan can be a good fit if you have strong credit, steady income and savings beyond your down payment, and the home you want is above your county’s limit. Before you commit, think about:

• How long you’ll stay. A larger loan is a bigger commitment if you might sell in a few years.
• Your cushion. Make sure the payment leaves room for taxes, insurance and upkeep on a higher-priced home.
• The local market. In some areas, a slightly lower price or a larger down payment keeps you under the conforming limit.

Start with a pre-approval. It shows you exactly what you qualify for and tells sellers your financing is real, which matters at higher price points.

This article is general information, not an offer to lend or a commitment to lend. All loans are subject to credit approval, underwriting and property valuation. Belem Servicing LLC, NMLS ID #715386 (NMLS Consumer Access).

Sources

• Federal Housing Finance Agency, Conforming loan limit values
• Federal Housing Finance Agency, FHFA announces conforming loan limit values for 2026