A jumbo loan is a loan that exceeds the conforming loan limits in your area. The Federal Housing Finance Agency (FHFA) sets conforming loan limits. In 2022, the maximum conforming loan limit is $647,200. If you’re in a high-cost area, the limit is $970,800. Any loan amount above those limits would be considered a jumbo loan.
You can check the limit for your county here.
Jumbo vs. conforming loan
If you’re buying an expensive home near or in a major city, you’ll probably hear the terms “jumbo loan” and “conforming loan.” A conforming loan meets guidelines and loan limits set by two government-supported enterprises: Fannie Mae and Freddie Mac.
A jumbo loan is a “non-conforming loan,” which means government-sponsored agencies don’t set the qualifying requirements.
What are jumbo mortgage requirements?
Lenders typically set stricter qualifying guidelines for jumbo mortgages. Jumbo mortgage requirements may include:
- A down payment of at least 20%
- A minimum credit score of 700 or higher
- A debt-to-income (DTI) ratio of 45% or lower
- A maximum loan amount of $1 to $2 million
- Several months’ (six to 24 depending on the lender) worth of cash reserves in the bank
Because jumbo loans don’t adhere to rules set by a government agency, some lenders offer niche jumbo programs for borrowers with unusual circumstances such as: