What is a jumbo loan? - Movement Mortgage Blog

Ever heard of a jumbo loan? Or wondering if it’s something you should know about? If you’re interested in a home that costs above the typical loan limit (which is normally about 450 thousand), then you’re going to want to know what it is. 

What is a jumbo loan?

It’s not just a clever name, a jumbo loan is a really large loan, allowing you to finance up to 3 million dollars for buying a high-cost house. The typical loan limit for Freddie Mac and Fannie Mae is a little more than 450 thousand dollars. So if you’re looking for a more high-dollar house, a jumbo loan is probably what you’ll need.


Jumbo loan requirements

Like U.S. News news says, jumbo loans generally have stricter requirements than other conforming loans would. You’ll probably have more documentation required of you, and underwriting will need to go through your application manually and with a stricter eye. General requirements that would be different with a jumbo loan than any other loan include:

    • Credit score: can require a minimum score of 700 or more.
    • Debt-to-Income ratio: a lower debt-to-income ratio will generally be required. If a higher one is allowed, it may increase the interest rate, causing a more expensive overall repayment amount.
    • Down payment: jumbo loans are where 20% down is generally the standard, if not more. But there may be exceptions for a lower options.
    • Reserves: the required amount of reserves (amount of emergency funds lender may require) may range from 3 to 24 months’ worth, as opposed to 1 month for a conforming option.


While these jumbo loan requirements may seem really stringent, remember: you’re asking for a lot more money than others generally are. A jumbo loan helps cover financing for a higher-cost home, so it’s understandable that they have stricter standards.


what is a jumbo loan

Awesome. What now?

If you’ve determined that jumbo loan financing is what you need for your dream home, contact a local loan officer. They’ll be able to let you know if it’s the fit for you, and what your financing options really are. If you’re eligible for a jumbo loan, a loan officer can walk you through the requirements and the rest of the home loan process. If not, they’ll be able to steer you into your next best option.


Falling in love with a home that has a bigger price tag doesn’t have to feel like an impossible dream. Know that if you have your affairs in order, financing may be possible to land that dream home. All you have to do now is to start a conversation with a loan officer to see what you’re eligible for.

Contact a local loan officer. 



About the Author:

Adam O'Daniel

Adam O'Daniel is Movement's Communications Director. He leads corporate communication and public relations efforts across the organization. Email him at adam.odaniel@movement.com.