GLOSSARY — REAL ESTATE TERMS
Jumbo Loan
A jumbo loan is a mortgage that exceeds the conforming loan limit set annually by the Federal Housing Finance Agency, requiring stricter credit, income, and reserve requirements since it isn't eligible for purchase by Fannie Mae or Freddie Mac.
Why the conforming limit matters
Conforming loan limits are set annually and vary by county based on local home prices, with high-cost areas like Los Angeles and Orange County carrying meaningfully higher limits than the national baseline. Any loan amount above that county's limit is classified as a jumbo loan.
What's different about qualifying
Because jumbo loans aren't eligible for purchase by Fannie Mae or Freddie Mac, lenders typically require stronger credit scores, lower debt-to-income ratios, larger down payments, and larger cash reserves than a comparable conforming loan.
WHAT TO CONFIRM BEFORE PURSUING A JUMBO LOAN
- Confirm the current conforming loan limit for your specific county
- Ask your lender about cash reserve requirements beyond the down payment
- Get pre-approved specifically for jumbo financing, not just a general pre-approval
- Compare rates and terms across multiple jumbo lenders, since pricing varies more than with conforming loans
What's the current conforming loan limit in Los Angeles and Orange County?
Limits are set annually and vary by county -- your lender can confirm the exact current figure for your specific county, since it's updated each year based on home price data.
Do jumbo loans always have higher interest rates?
Not always -- pricing varies by lender and market conditions, and jumbo rates have at times been comparable to or even lower than conforming rates depending on the lending environment.
How much down payment do jumbo loans typically require?
Requirements vary by lender, but jumbo loans commonly require larger down payments than conforming loans, often 10-20% or more depending on the loan amount and borrower profile.