Jumbo loans: How to buy a higher-priced house in 2025
If you're looking to buy a home priced north of $800,000, there's a good chance you'll be seeking to qualify for a jumbo loan. That type of mortgage is designed to serve the market for higher-value properties.
Jumbo loans are unique in some important ways, including how you qualify. Here's what you need to know about jumbo mortgages in 2025.
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Read more: How to buy a house in 2025
The type of mortgage loan for properties priced above the single-family "conforming loan" limits set by the Federal Housing Finance Agency is known as a jumbo loan.
For 2025, conforming mortgage loans are capped at $806,500 in most areas of the United States, but that can go up to $1,209,750 in counties within Alaska, Guam, Hawaii, and the U.S. Virgin Islands.
Tip: Use this tool to check the conforming loan limits in the area where you're looking to buy. Remember, if the home's purchase price is greater than the conforming loan limit, you'll need a jumbo loan.
Read more: How much house can I afford? Use the Yahoo Finance home affordability calculator.
While not all lenders offer jumbo loans, you will still have many mortgage lenders to choose from.
Jumbo loans are issued by lenders willing to take on the risk of larger mortgages that cannot be sold to Fannie Mae and Freddie Mac. When a lender sells a conforming loan to Fannie or Freddie, it frees up capital to lend more. Since lenders often hold jumbo, or "non-conforming," loans on their own books, they decide, not the FHFA, what it takes for a borrower to qualify and the maximum amount they are willing to lend on a single property.
Most jumbo loan lenders will finance homes up to $2 to $3 million.
Learn more: What is a conventional loan?
Specific loan requirements vary by lender, but generally, jumbo loans require a borrower to:
Have cash reserves often equal to or greater than six to 12 months of mortgage payments and expenses.
Show a history of excellent credit and proof of sufficient income.
Have a debt-to-income ratio of 45% or less.
Pay higher closing costs.
Provide a down payment of at least 10%. Some lenders look for 20% down or more.
Have a FICO credit score of 700 or higher.
Tip: There is one government agency that backs jumbo loans: the Department of Veteran Affairs. VA loans are available to military service members, veterans, and eligible survivors and usually require no down payment. Credit score requirements can be as low as 620, as well.
Read more: What credit score is required to buy a house?
Allows you to purchase a high-cost home.
Potentially lower interest rates than conforming loans.
You have the option to get an adjustable-rate mortgage.
Stricter qualifying standards.
Often requires higher cash reserves than a typical mortgage.
Lenders usually prefer down payments of 10% or more.
You're likely to pay higher closing costs.
Learn more: How does an adjustable-rate mortgage work?
The term "jumbo loan" refers to a mortgage for an amount exceeding the FHFA-approved limits for a conforming loan (which is what you might think of as a "regular mortgage"). Basically, it means you're borrowing more than you could with a typical mortgage.
No, a mortgage for $600,000 is not large enough to be considered a jumbo loan.
In most parts of the U.S., you'll need a jumbo loan if you borrow more than $806,500. That amount increases to $1,209,750 in counties within Alaska, Guam, Hawaii, and the U.S. Virgin Islands.
The main downsides of a jumbo loan are the stricter requirements — you'll probably need a higher credit score and larger down payment than you would with a typical mortgage. You should also be prepared for the amount of interest that will accumulate on a large loan amount over the years.
Yes, it's usually harder to qualify for a jumbo loan than for other types of mortgages. You'll probably need a great or excellent credit score and a minimum 10% down payment.
No, not all mortgage lenders require a 20% down payment for a jumbo loan. Depending on the lender and your financial situation, you may need 10% to 30% down to secure a jumbo mortgage loan.
A 30-year term is common for jumbo loans but is not the only term length available. Some mortgage lenders will have other length options, and many offer both fixed-rate and adjustable-rate jumbo loans.
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