Jumbo loans can help you afford a more expensive house in a high-demand location. A jumbo loan is a mortgage that lets you finance a home purchase that surpasses the limits of a conventional loan, as set by the Federal Housing Finance Agency. For 2022, the conventional loan limit for a mortgage is $647,200 in most counties across the US. If you’re taking on a home loan that’s larger than this amount, you’ll need a jumbo loan.
Generally speaking, you need a higher credit score (usually 680 or above) and higher income (to ensure you can make payments) to qualify for a jumbo loan. Also called nonconforming loans, since they do not conform to FHFA limits, jumbo loans typically require a larger down payment. As a result of skyrocketing home prices over the last two years, the loan limit for a jumbo loan was raised to almost $1 million this year, and is now $970,800.
What are jumbo mortgage rates?
Jumbo mortgage rates tend to be higher than conventional mortgage rates, since you’re borrowing a larger amount. However, since rates began rising in early 2022, jumbo loans have had slightly lower rates than conventional loans. The 30-year fixed-interest rate for a jumbo loan is 6.07%, compare to the national average for a 30-year fixed-rate mortgage, which is still near a 20-year high at 6.30%. If you’re trying to buy a home in a sought-after area with significant housing demand, it’s likely you’ll need a jumbo loan.
Current jumbo mortgage rate trends
Mortgage interest rates have consistently risen since the beginning of last year in response to the Federal Reserve raising interest rates seven times. Jumbo loan interest rates typically follow the same trend as mortgage rates -- and are usually even higher than conventional mortgage rates. But as a result of the housing frenzy during the pandemic and current state of the economy, jumbo loan interest rates are now in the same range as average 30-year mortgage rates. At the beginning of 2022, 30-year jumbo interest rates were around 3% and are now above 6%.
How to get a jumbo mortgage
Credit requirements are stricter for jumbo mortgages since they are larger loans that require bigger down payments. You typically need a minimum credit score of 680 to qualify for a jumbo loan, although the required score varies by lender -- some lenders will accept a score as low as 660.
You should also be prepared for a larger down payment when it comes to a jumbo loan: The minimum down payment requirement for a jumbo loan is 10%, compared with 3% for a conventional mortgage. In order to qualify for a jumbo loan, you need to have your financial life and documents ready to be evaluated by a lender, especially in a competitive housing market like the one we’re experiencing now.
- Have your finances in order: Gather financial documents like your W-2, pay stubs and bank statements for proof of income to show lenders you can afford the loan.
- Get prequalified: In order for a seller to take your offer seriously you have to verify your creditworthiness by going through the prequalified process (or the preapproval process, which takes it a step further and officially approves you for the loan).
- Have a strong credit score: Pay off high-interest debt like credit card debt to raise your credit score, and make sure your debt-to-income ratio is low overall.
- Assemble a 10% down payment: At a minimum, you will be required to put down 10% for a jumbo loan.
Current mortgage rates
|30-year fixed-rate FHA||6.37%||7.29%|
|30-year fixed-rate VA||6.57%||6.69%|
|30-year fixed-rate jumbo||7.05%||7.06%|
|15-year fixed-rate jumbo||6.39%||6.40%|
|5/1 ARM jumbo||6.04%||7.82%|
|7/1 ARM jumbo||6.23%||7.83%|
|3/1 ARM jumbo||5.63%||7.77%|
|30-year fixed-rate refinance||7.12%||7.14%|
|30-year fixed-rate FHA refinance||6.40%||7.33%|
|30-year fixed-rate VA refinance||6.70%||6.89%|
|30-year fixed-rate jumbo refinance||7.11%||7.12%|
|20-year fixed-rate refinance||6.84%||6.87%|
|15-year fixed-rate refinance||6.47%||6.50%|
|15-year fixed-rate jumbo refinance||6.45%||6.46%|
|5/1 ARM refinance||6.00%||7.70%|
|5/1 ARM jumbo refinance||6.06%||7.54%|
|7/1 ARM refinance||6.30%||7.90%|
|7/1 ARM jumbo refinance||6.20%||7.80%|
|10/1 ARM refinance||6.47%||7.93%|
We use information collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. The above table summarizes the average rates offered by lenders across the country.
Why should you compare jumbo mortgage rates?
Just as with any mortgage, shopping around with different lenders will help you secure the lowest rate possible. Comparing interest rates and fees between lenders allows you to see what the true cost of your loan will be. Getting quotes from numerous lenders will save you money: Interviewing just one additional lender can save you on average $1,500 over the lifetime of your loan, and speaking with five lenders can save you $3,000 on average over the course of your mortgage, according to Freddie Mac.
How to compare jumbo rates
Getting a sampling of rates for any type of loan is important, and you may see a range of offers from banks, credit unions and online institutions. Make sure that you’re comparing apples to apples, however. Some lenders will use an APR and others may use an interest rate. Those are two related but different things.
Who should get a jumbo mortgage?
A jumbo mortgage could make sense if you satisfy one of the following requirements:
- You’re in an area with a high cost of living: Big cities and areas along the coasts can be particularly expensive. Buying a home in one of those places could require a jumbo mortgage.
- You have great credit: For a lender, a jumbo mortgage is a bigger risk compared to other types of mortgages, given that you’re borrowing a larger amount of money. As such, it’s essential to have a strong credit score as part of your application.
- You don’t have sufficient cash on hand: People typically take out a mortgage because they don’t have enough cash to pay for a house out of pocket. A jumbo loan allows you to finance a home.
How to get a jumbo mortgage
1. Check your credit. Your credit score is a significant factor in landing a jumbo loan because you’re borrowing a large sum. Typically, an applicant would need a credit score of at least 680 to qualify, though specific score requirements vary by lender. Some lenders may accept a slightly lower score in certain situations.
2. Prepare your down payment. The minimum down payment for a jumbo loan is 10% of the total cost of the home. That’s significantly higher than a conventional mortgage, which usually requires a 3% down payment.
3. Organize your documents. Any lender will want access to your bank statements, tax documents, pay stubs and other financial documents.
4. Get preapproved. A mortgage preapproval will provide more information about how much home you can afford. It also signals to sellers that you’re serious about making an offer.
5. Find your home. With a preapproval in hand, you can start shopping for a home in earnest.
You should consider a jumbo mortgage if you’re buying an expensive home in an area with a high cost of living. In regions where housing prices are sky-high, the limits for a jumbo loan are higher than locations without significant demand, but in most places in the US a loan is considered a jumbo loan if it exceeds $647,200. However, in places like California and New York, the limit for a jumbo loan rises to almost $1 million -- $970,800 to be exact.
Jumbo loans require a higher minimum credit score than conventional loans. The minimum credit score for jumbo loans is usually around 680, though some lenders will accept 660, whereas a typical minimum credit score for a conforming 30-year loan is usually 620.
There are fixed-rate jumbo loans as well as adjustable-rate jumbo mortgages. Typically fixed-rate jumbo loans are offered in 15-year and 30-year terms, although it varies depending on the type of jumbo loan you take out. ARMs, for example, usually come in five-, seven- or 10-year terms. You can also refinance a jumbo loan, with a standard rate and term refinance or a cash-out refinance just like conventional loans.
Jumbo rates are set just like traditional rates, based in part on the rates set by the Federal Reserve and macroeconomic conditions. But your financial situation, including your credit score and income, will be a key factor in determining your specific rate.
More mortgage tools and resources
You can use CNET’s mortgage calculator to help you determine how much house you can afford. The CNET mortgage calculator factors in variables like the size of your down payment, home price and interest rate to help you figure out how large of mortgage you may be able to afford. Using the CNET mortgage calculator can also help you understand how much of a difference even a slight increase in rates makes in how much interest you’ll pay over the lifetime of your loan.