A Beginner’s Guide to Jumbo Loans and How to Qualify

Jumbo loans don’t follow standard maximum limits set by government-sponsored entities (GSEs). These loans allow homebuyers to purchase more expensive homes because lenders follow their own rules for approving a loan and often consider loans as investments. 

Jumbo loans also got their name from their large loan balances. Plus, it has additional rules for borrower qualifications. Most conforming loans in 2021 are around $548,250. However, in some areas, the loan limits go much higher to account for local housing markets. For example, in Los Angeles County, the 2021 limit is $822,375.

You might not think about this stuff, but it is important when buying a high-priced home whose down payment you can’t afford. If you are in this situation, you may need a jumbo loan. You might even find yourself being offered a better rate. 

To know more about jumbo loans, we are going to discuss them in detail in this article:

Reasons Why Jumbo Lenders Offer Jumbo Loans

Each lender, whether they are a bank or private investor, has their reasons for offering jumbo loans. Since they have their own criteria, it’s easier to find for a loan that fits the borrower’s needs. 

What you can do is find a lender that fits your financial situation. Take the property into account. Different lenders have different requirements, so it’s best to ask around first. 

Requirements for Jumbo Loans

Jumbo loans are the same as other loans. You also need to pass the criteria. However, the requirements for these loans are often more difficult than conventional loans. Also, the loan amounts are higher, so lenders are pickier since they are high-risk loans.  

Here are some of the requirements you need to consider: 

  • Credit History – A FICO score of above 700 is a minimum for most buyers. You need to have this credit score before you get approved for a jumbo loan. However, there are some cases where they allow a credit score lower than 700.
  • Down Payments – They require you to have a downpayment of 20 percent or more. Some lenders will allow you to make a 10% downpayment. Others offer less. However, you need to have a good credit score, stable and strong income, or significant reserve assets.
  • Income and Assets – Lenders ask for documentation on your income and assets to ensure that you can afford the loan. A monthly income is enough, but for self-employed individuals, you need to pass tax documents. 

Payment for Jumbo Loans

You have to pay interest charges, closing costs, and mortgage insurance. Usually, jumbo loans have high interest rates—again, because they are high-risk loans. Don’t worry; jumbo loans are available with fixed or variable rates.

As for closing costs—the appraisal fees are higher since the homes purchased are more expensive. You may also need two appraisals for the loan to be approved. Lastly, mortgage insurance is needed to protect lenders when a borrower fails to pay the loan. 


Remember that jumbo loans are not designed to allow borrowers to buy more than they can afford. The loans are created for secure buyers to buy a home that is more expensive than others. If you plan on getting a jumbo loan, you may need the information in this article.

You can always reach out to a trusted lender to know about their terms. ACB Mortgage Solutions can help you with your housing loan. We can help you out, so contact us today!