Jumbo Loans


Jumbo loans are a particular kind of mortgage for especially large amounts of money. They are designed to help buy particularly expensive types of residential property.

Quick Summary

Jumbo loans are made to go beyond the limits. In the United States, there are limits to how much you can borrow on a mortgage, typically decided by countries. Limits usually vary between $400,000 and $600,000. A jumbo loan is any home loan that goes beyond this limit under special circumstances. As you can imagine, those circumstances are usually buying a very large house or piece of property that cost well into millions of dollars. This makes jumbo loans a very specific solution to high-cost homes.

Pros and Cons


-A unique tool. Jumbo loans exist because no other mortgage can do what they can – allow for large-scale property purchasing. This is a boon to investors as well as buyers, since it allows them to make the sort of purchases they have in mind…as long as they can qualify. Without these loans, those multi-million dollar home sales would be far more difficult.


-Far stricter rules. Because jumbo loans exceed the limits of traditional loans, they come with much stricter parameters. There is much less room for flexibility and term discussion, and a higher down payment may be required. The interest rates are also more often adjustable rates instead of fixed rates, and tend to be significantly higher than traditional mortgages.

What Else Should I Know?

It's no surprise that lenders will only offer these loans to borrowers with extensive assets and a proven ability to purchase million-dollar properties. Minimum required credit scores tend to be around 700, and lenders will want to see multiple appraisals, confirmation of enough funds to make at least a year's worth of payments, and other proof that the borrower can handle the jumbo loan – which again, often rise above a million dollars.