Jumbo loan

A jumbo loan is any residential mortgage with a balance above the conforming loan limit, the cutoff above which Fannie Mae and Freddie Mac won't buy a loan from the originating lender. The 2026 baseline conforming limit is $806,500 for single-family homes in most counties, with higher limits in designated high-cost counties (where the limit can run up to about $1.21 million). Loans above the limit are jumbo and aren't sold to the agencies; they're either kept on the lender's books or sold to private secondary-market investors.

How it works: jumbo underwriting tends to be stricter than conforming. Lenders typically require higher credit scores (often 700+), larger down payments (10–20% common, with some programs allowing less), more reserves (sometimes 6–12 months of payments held in reserves), and more documentation than conforming loans. Rates have historically been slightly higher than conforming, though in some markets jumbo rates are competitive with or even below conforming rates because lenders use jumbo loans to attract higher-net-worth banking relationships.

Why it matters: borrowers near the conforming limit have a meaningful product choice. A loan one dollar above the limit becomes a jumbo, which can shift the rate, reserve requirements, and qualifying standards. Bringing a slightly larger down payment to push the loan size below the limit sometimes pays off in rate and underwriting flexibility.

Common gotcha: the conforming limit varies by county. A buyer purchasing in a high-cost county (much of California, parts of New York metro, Hawaii, parts of DC metro) has a higher limit before crossing into jumbo territory. The FHFA publishes the county-specific limits annually; a quick check before locking the loan size matters for buyers in high-cost markets.