If you’ve set your sights on a luxury property, a coastal home, or simply live in a high-priced market, you might find that a standard mortgage won’t cover the cost.
That’s where a jumbo loan comes in — a mortgage designed for properties that exceed federal loan limits.
In this guide, we’ll explain what a jumbo mortgage is, how it works, what it takes to qualify, and when it makes sense to get one.
What Is a Jumbo Mortgage?
A jumbo mortgage, or jumbo loan, is a type of home loan that exceeds the maximum conforming loan limits set by the Federal Housing Finance Agency (FHFA).
In other words, if the property you’re buying costs more than what’s allowed under conventional limits, you’ll need a jumbo loan to finance it.
Jumbo mortgages can be used for:
- Primary residences
- Vacation homes
- Investment properties
Since these loans fall outside the conforming limits, they aren’t purchased by Fannie Mae or Freddie Mac — which means lenders take on more risk and apply stricter qualification standards.
Jumbo vs. Conforming Loans
Here’s a quick breakdown of how jumbo loans differ from traditional conforming loans:
| Feature | Conforming Loan | Jumbo Loan |
|---|---|---|
| Loan Limit (2023) | Up to $726,200 (most U.S. counties) | Above $726,200 (up to $1.1M+ in some markets) |
| Backed by Fannie/Freddie? | Yes | No |
| Typical Down Payment | 3–10% | 10–20% or more |
| Credit Score Requirement | 620+ | 700+ (varies by lender) |
| Underwriting Type | Automated | Manual or enhanced review |
👉 Tip: You can check your area’s loan limits using the FHFA’s official map.
Jumbo Loan Rates
You might assume jumbo loans always come with higher rates — but that’s not necessarily true.
Depending on your credit profile and lender, jumbo rates can be as competitive (or even lower) than conventional loan rates.
Factors that affect your jumbo rate include:
- Credit score
- Down payment size
- Loan-to-value (LTV) ratio
- Market conditions and lender policies
Working with a multi-lender platform like Lexford Financial lets you compare options side-by-side and secure the best possible rate for your scenario.
How a Jumbo Mortgage Works
Jumbo loans function similarly to conventional mortgages — you’ll still choose between fixed or adjustable rates, and make monthly payments toward principal and interest.
However, the qualification standards are more demanding.
Key factors lenders evaluate:
- Property Type: Can include high-value homes, vacation properties, or investment real estate.
- Down Payment: Expect to put down 15–20% (sometimes more, depending on loan size).
- Credit Score: Most lenders require 700+, though stronger profiles may qualify with less.
- Debt-to-Income Ratio (DTI): Generally capped around 43% or lower.
In essence, jumbo loans are built for financially stable borrowers purchasing premium properties.
Benefits of Jumbo Loans
Why choose a jumbo loan over other financing options?
Here are some of the key advantages:
- Finance high-value properties with a single loan (no need for multiple mortgages).
- Competitive interest rates, especially for strong-credit borrowers.
- Flexible loan terms and customized options based on your financial profile.
- Potential investment leverage — ideal for those looking to grow a real estate portfolio.
For high-income buyers, a jumbo loan can serve as a strategic wealth tool, allowing them to maintain liquidity while investing in premium real estate.
Requirements for Jumbo Mortgages
Because jumbo loans involve larger amounts, lenders apply additional criteria before approval.
- Cash Reserves: You may need to show proof of 6–12 months’ worth of mortgage payments in savings.
- Higher Closing Costs: Expect slightly higher fees due to additional underwriting steps and documentation.
- Verified Income Stability: Usually two years of consistent income history and tax returns.
- Manual Underwriting: A real underwriter often reviews your full financial profile — not just an automated system.
These extra layers of review protect both you and your lender, ensuring you’re set up for long-term success.
Get Expert Help from Lexford Financial
At Lexford Financial, we make it easy to find the right jumbo loan for your dream home.
Whether you’re buying a luxury property or simply exceeding local limits, our team and technology simplify the process — from rate comparison to closing.
✅ Compare rates from top lenders
✅ Get pre-approved in minutes
✅ Finance your high-value home with confidence