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Loan Types

Jumbo Loan

A jumbo loan is a mortgage larger than the conforming loan limit set each year by the Federal Housing Finance Agency, so it can't be sold to Fannie Mae or Freddie Mac. Because the lender takes on more risk, jumbo loans often ask for stronger credit, more reserves, and a larger down payment than a conforming loan.

A jumbo loan starts where conforming ends. Each year the Federal Housing Finance Agency sets a limit on the loan amount Fannie Mae and Freddie Mac will buy, and that ceiling is higher in expensive areas. Borrow above it and you’re in jumbo territory, which the agencies won’t purchase, so the lender either holds the loan or sells it to a private investor.

Because no government-sponsored buyer is backstopping it, the bar is usually higher: stronger credit, more cash reserves, and often a larger down payment. Jumbo rates aren’t automatically higher or lower than conforming, since pricing is risk-based and moves with the market. If you’re shopping above the limit, I’ll show you where it sits in your area.

Related terms

Conforming Loan

A conforming loan is a conventional loan that meets the guidelines and loan limits set by Fannie Mae and Freddie Mac. Staying within the conforming limit often means more competitive terms. Loans above that limit are called jumbo loans and follow different rules, since they can't be sold to those agencies.

Conventional Loan

A conventional loan is a mortgage that isn't backed by a government program like FHA or VA. It often needs solid credit, but it can allow down payments as low as 3% and lets you drop mortgage insurance once you build enough equity. It's the most common loan type for many buyers.

Down Payment

A down payment is the part of the purchase price you pay upfront in cash, with the loan covering the rest. It's shown as a percentage, so 5% down on a $400,000 home is $20,000. A bigger down payment lowers your loan amount and can reduce or remove mortgage insurance. Some programs allow as little as zero down.

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Last updated: June 13, 2026

This definition is educational and isn't an offer to lend or financial advice. Rates, programs, and guidelines may change without notice. All loans are subject to credit and property approval.

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