1. What is a Jumbo loan?
Jumbo loans, also known as over-the-counter loans, are mortgage loans whose loan amounts exceed the conforming loan limit set by the Federal Housing Finance Agency (FHFA). In 2025, the conforming loan limit for most U.S. counties is $806,500, and loans exceeding this amount are Jumbo loans. Since Jumbo loans cannot be guaranteed by Fannie Mae and Freddie Mac, the loan risk is higher and is usually borne by the lender itself.
2. Jumbo loan interest rates and fees
1. Current interest rate situation
According to data from June 24, 2025, the average interest rate for a 30-year fixed-rate Jumbo loan is about 6.95%, and the 15-year fixed-rate is about 6.30%. In some market environments, the Jumbo loan interest rate is even lower than the conforming loan interest rate, reflecting the fierce market competition.
2. Fee characteristics
Jumbo loans are usually accompanied by higher loan origination fees and settlement fees. Due to the large loan amount, the relevant fees are calculated proportionally, and the overall expenditure is higher. In addition, the loan approval process is more stringent, involving more financial review and document submission.
3. Eligibility requirements for applying for Jumbo loans
- Credit score: Most lenders require a credit score of more than 700 points, and some even require more than 760 points to prove the borrower’s credit reliability.
- Down payment ratio: Usually at least 10% to 20% down payment is required, and high-end loans may require a higher ratio.
- Debt-to-income ratio (DTI): Generally, DTI is required to be less than 43%, and some lenders are more stringent.
- Cash reserves: Lenders often require borrowers to have sufficient cash reserves to cover 6 to 12 months of loan repayment ability.
- Manual review: Jumbo loans are mostly manually reviewed, and loan officers will review the borrower’s financial situation in detail to ensure that the risk is controllable.
4. Advantages of Jumbo Loans
- Higher loan amount: It meets the financing needs of high-end properties, especially in areas with high housing prices.
- Flexible loan terms: Some lenders offer lower down payments (even 10%) and a variety of loan term options.
- Potential competitive interest rates: In certain market environments, Jumbo loan interest rates are close to or even lower than those of conforming loans.
- Customized services: Large banks usually provide exclusive private banking services and discounts for Jumbo loan customers.
5. Challenges of Jumbo Loans
- Strict qualification review: High credit requirements, sufficient cash reserves and low DTI thresholds limit the qualifications of some borrowers.
- Higher down payment pressure: Down payment requirements of up to 20% or even more increase the financial pressure of buying a house.
- Higher loan costs: Including loan origination fees, appraisal fees and other settlement fees, the overall cost is significantly higher than conventional loans.
- Limited loan sources: Not all lenders offer Jumbo loans, so there are fewer choices.
6. People who are suitable for applying for Jumbo loans
- Plan to buy a high-priced home, and the loan amount exceeds the compliance limit.
- Borrowers with excellent credit records and sufficient cash reserves.
- Hope to use funds flexibly through loans instead of paying the full house price at one time.
- High net worth customers who need diversified loan products and personalized services.
Jumbo loans are an indispensable financing tool in the high-end real estate market, helping homebuyers break through the compliance loan limit and realize the ownership of their dream home. Although the application threshold is high and the cost is high, its flexible loan amount and potential competitive interest rate make it an ideal choice for high net worth homebuyers. Homebuyers should fully evaluate their own financial situation, reasonably plan the down payment and cash reserves, and choose a reputable lender to ensure a smooth and efficient loan process.