What Is a Jumbo Loan in Real Estate?

A jumbo loan is a type of mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. Because these loans fall outside standard underwriting guidelines, they often require stronger credit, larger down payments, and stricter financial documentation.

✅ How a Jumbo Loan Works

A jumbo loan applies when a property’s purchase price exceeds the annual conforming limit (e.g., $766,550 for most U.S. counties in 2024). Because these loans are riskier for lenders, borrowers must meet higher financial standards.

  • Loan amount exceeds the conforming limit
  • Higher credit score requirements (typically 700+)
  • Larger down payments (often 10–20%+)
  • Full financial documentation required

💡 When a Jumbo Loan Makes Sense

A jumbo mortgage is ideal for buyers who are purchasing high-value homes or investing in luxury markets where conforming limits do not apply.

  • Buying in high-cost or luxury markets
  • Strong credit and financial reserves
  • Desire to avoid multiple smaller loans (piggyback loans)

These loans can also be cost-effective depending on interest rate spreads between conforming and jumbo products.

📉 Risks of Jumbo Loans

  • Higher interest rates compared to conforming loans
  • Larger down payment and cash reserve requirements
  • Stricter underwriting and income verification
  • Potentially more difficult refinancing later

Before choosing a jumbo mortgage, compare options such as a portfolio loan or Non-QM mortgage, which may offer more flexible terms.

🏠 Shopping for a high-value home and need flexible financing?

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