Section 5: Conventional Jumbo Loans
Conventional Jumbo Loans
Most conventional loans have to be within local loan limits set by Fannie Mae and Freddie Mac. Jumbo loans, on the other hand, are for mortgage amounts above conforming loan limits. So jumbo mortgages essentially pick up where conventional loans leave off.
- In 2022, in most of the United States, conforming loan limits max out at $647,200 for a single–family home
- That means jumbo loans are typically any amount above $647,200
However, those loan limits are more generous in some high–priced real estate markets. In the most expensive parts of the country, you could get a single–family conforming loan up to your current count lending rate.
Jumbo loan limits vary by lender. But they typically go into the millions. So, if you need to borrow more than local loan limits allow, you will likely need a jumbo mortgage.
Conventional Jumbo Loan Requirements
While service requirements remain the same, VA jumbo credit and income requirements are typically more stringent compared to a conforming VA loan. Additionally, VA jumbo rates may differ slightly -- but every lender is different.
Conventional Jumbo Loan Credit Score Requirements
Conforming mortgage requirements are quite loose. It’s often possible to qualify with just 3% down and a FICO score of 620 or higher. By contrast, lenders have more stringent requirements for someone wanting a jumbo loan. That’s because they’re putting a lot of money on the line. And they can’t share that risk with Fannie Mae or Freddie Mac. Many lenders require a FICO® Score☉ of 720 or better for many jumbo loans, and typically will accept no score lower than 660, whereas lenders may accept scores as low as 600 for conforming mortgages. Larger down payments
Conventional Jumbo Loan Down Payments
You can take some of the pressure off by making a big down payment. If you put down more than 20%, lenders might be more forgiving about things like your credit score or debt–to–income ratio (DTI). But, if that’s not possible, expect to need excellent credit, not too much existing debt, and decent cash reserves. (Cash reserves are liquid funds left over after you’ve made the down payment and closing costs, which could be tapped to cover mortgage payments in an emergency.) Obviously, the more you’re borrowing and the lower your down payment, the tighter your lenders’ qualifying criteria are likely to get. Overall, Conventional jumbo loan guidelines vary depending on the lender, the size of the loan and other factors.
Talk with a Orbit Home Loan specialist if you're considering a Jumbo Loan.
Are jumbo mortgage rates higher?Traditionally, jumbo loans have slightly higher interest rates than those on conventional mortgage loans. But that’s not always the case. Indeed, on the day this was written (in mid–August, 2021), Bankrate’s survey showed average jumbo rates actually lower than conventional ones. And we quickly found a big–name lender offering the exact same rate for both loans. As with all mortgage products, lenders assess your riskiness as a borrower when deciding the rate they’ll offer you. And some are more forgiving than others. So you should shop around between lenders to find your lowest mortgage rate and best deal, regardless of the type of loan you want.