What is a jumbo loan?

A jumbo loan is a mortgage that exceeds the conforming loan limit set by the Federal Housing Finance Agency — $766,550 in most areas for 2024. Because jumbo loans cannot be purchased by Fannie Mae or Freddie Mac, lenders hold them on their own books and take on more risk. This typically means stricter qualification requirements: credit scores of 720 or higher, DTI ratios below 43%, larger down payments (often 10–20%), and larger cash reserves. Interest rates on jumbo loans are sometimes slightly higher than conforming rates, though they can be competitive in low-rate environments.