Jumbo Loans for Larger Mortgage Amounts (2024)

FAQs

Jumbo Loans for Larger Mortgage Amounts? ›

About jumbo loans

In general, the loan limits are $766,550, although they go as high as $1,149,825 in some high-cost counties in continental United States and Puerto Rico, and higher still in Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Mortgage loans are allowed to exceed these loan limits.

For 2024, the upper limit is $766,550 to $1,149,825, depending on location. Jumbo loans are mortgages that exceed these limits in their respective counties.

With jumbo loans, though, it is typically required that borrowers make a down payment of at least 10% of the home's value. Some lenders might actually require you to make a down payment of as much as 20%.

Jumbo Loans: When a Regular Mortgage Isn't Enough

You may need a jumbo loan for homes that cost more than $766,550. Jumbo loans have stricter qualification rules.

Jumbo loans typically have higher qualification standards than conforming loans since lenders take on extra risk with jumbo loans. Because of this, lenders are looking at several key factors to determine your risk level. Generally, this means higher credit, income and cash reserve requirements.

If you want to avoid a jumbo loan, you might be able to finance the purchase of a more expensive home with an 80-10-10 mortgage, also known as a piggyback loan. Rocket Mortgage doesn't offer these. In this loan type, you take out two mortgages, one for 80% of the home's purchase price and a second one for 10%.

1. Max debt-to-income ratio (DTI) for jumbo loans is usually 43% Your DTI is the percentage of your monthly earnings used to pay off all debt obligations and it's used by lenders to determine how large of a monthly mortgage payment you can handle.

Many mortgage lenders offer jumbo loans up to $3 million or $5 million. You might be able to find jumbo loans in even higher amounts, especially if you work with a mortgage broker who specializes in them. Jumbo loans can be used for primary residences, investment properties and vacation homes.

Do jumbo loans require mortgage insurance? Making a down payment of less than 20% normally means you have to pay for private mortgage insurance (PMI). That's true for most jumbo loans as well as conforming mortgages. PMI can be pretty expensive — especially for jumbo loans.

What credit score is needed for a jumbo loan? ›

Here's a look at the typical requirements you can expect with a jumbo loan, though they vary from lender to lender: Credit score: 680 or higher. Max debt-to-income ratio: 38% to 43%

Home loans below the limit are called conforming mortgages. Home loans above the conforming loan limit are called jumbo mortgages. A jumbo mortgage can have a fixed rate or an adjustable rate. A 30-year jumbo mortgage will have a loan term of 30 years.

Pros and cons of a jumbo mortgage

You can borrow above the conforming loan limit. You can get a fixed- or adjustable-rate loan. You could pay interest rates that are slightly less than or near conventional loan rates. You can avoid private mortgage insurance (PMI) if you make at least a 20% down payment.

A jumbo mortgage is in excess of FHFA standards, typically starting around $650,000, and cannot be backed by government-sponsored enterprises like Fannie Mae or Freddie Mac. Jumbo mortgages tend to have more stringent requirements for borrowers than conventional loans do.

A jumbo loan is a mortgage that exceeds the conforming loan limit set by the FHFA for a given area. The most common conforming loan limit for 2024 is $766,550, which means any mortgage that's larger than that is a jumbo loan.

1. Max debt-to-income ratio (DTI) for jumbo loans is usually 43% Your DTI is the percentage of your monthly earnings used to pay off all debt obligations and it's used by lenders to determine how large of a monthly mortgage payment you can handle.

down payment: Typically between 10% to 30% Documents needed: Might require additional income documentation and tax returns (especially for self-employed borrowers) Cash reserves: 6 to 18 months of mortgage payments.

For 2024, the Federal Housing Finance Agency (FHFA) raised the maximum conforming loan limit for a single-family property to $766,550 from $726,200 (in 2023).