What is a jumbo loan and when do I need one?

A jumbo loan is a mortgage that exceeds the conforming loan limit set each year by the Federal Housing Finance Agency — about $806,500 in most U.S. counties for 2025, and higher in expensive markets. Because these loans are too large to be backed by Fannie Mae or Freddie Mac, lenders take on more risk and impose stricter standards: typically a higher credit score (often 700+), a larger down payment (commonly 10%–20%), lower debt-to-income ratios, and significant cash reserves — sometimes 6–12 months of payments. Rates can be similar to or slightly higher than conforming loans depending on the lender. Jumbo loans are common in high-cost areas where even modest homes top the conforming limit. If you're near the limit, sometimes a slightly larger down payment keeps you in conforming territory and simplifies qualifying. Run the numbers at wealthserene.com/tools/home-affordability.