What Is a Jumbo Loan, and Do I Need One
- By Jim Blackburn
- on
- 100 first time home buyer FAQs
1. A Jumbo Loan Exceeds Conforming Loan Limits for High-Priced Homes
A jumbo loan is a mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac.
Conforming loans are those that meet the guidelines for government-backed financing. If you’re buying a property in an area where home prices are high, you might need a jumbo loan to cover the cost.
Jumbo loans are used for luxury or high-value properties—typically those above the conforming loan limit (which varies by location).
If you’re purchasing a high-priced home, a jumbo loan could be your ticket to getting the funds you need.
2. Jumbo Loans Come With Stricter Requirements
Because jumbo loans are for larger amounts, they come with stricter approval standards than conforming loans:
You’ll need a higher credit score (usually 700 or above)
Expect larger down payments—often at least 20%
Be prepared for higher interest rates compared to conforming loans, although rates have been competitive in recent years
These more stringent requirements help lenders manage the higher risk associated with jumbo loans.
3. You’ll Need a Jumbo Loan If You’re Buying a Luxury or High-Value Property
If you’re looking at a home that’s well above the local conforming loan limit, a jumbo loan will be necessary.
Jumbo loans are typically the go-to option for luxury homes, multi-million dollar properties, or homes in high-cost housing markets.
However, before jumping in, make sure you’re financially prepared for the extra scrutiny during the approval process.
Jumbo loans are powerful, but they require careful planning and a solid financial foundation
Considering a Jumbo Loan for Your New Home? Let’s Walk Through It Together
Download our free “Jumbo Loan Buyer’s Guide” — includes requirements, benefits, and things to consider before you apply
Chat live now to learn more about jumbo loans and how they fit into your financial situation
Schedule a call with a Stairway Mortgage advisor to explore jumbo loan options and how we can help you get approved
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