Jumbo Loan
A mortgage that exceeds conforming loan limits set by the FHFA, requiring stricter qualification standards.
What is Jumbo Loan?
A jumbo loan is a residential mortgage that exceeds the conforming loan limits established annually by the Federal Housing Finance Agency (FHFA). In 2024, the baseline conforming limit is $766,550 for most U.S. counties, with higher limits in high-cost areas. Because jumbo loans exceed these limits, they cannot be purchased by Fannie Mae or Freddie Mac and must be held on the originating lender's balance sheet or sold to private investors. This results in stricter qualification requirements: lenders typically require a minimum credit score of 700–720, a down payment of 10–20%, cash reserves of 6–12 months of payments, and lower debt-to-income ratios. Jumbo loans are most common in expensive coastal markets and carry interest rates that may be slightly above or below conforming rates depending on market conditions.
Example
A borrower purchasing a $1.5 million home in San Francisco with 20% down needs a $1.2 million mortgage. Because this exceeds the 2024 high-cost area conforming limit of $1,149,825, it must be structured as a jumbo loan requiring a 720+ credit score and proof of substantial liquid assets.
Source: FHFA — Conforming Loan Limits