Choosing between a jumbo loan and a conventional conforming loan usually depends on one key factor: loan size.
A conventional loan is a mortgage that is not insured by a government agency such as FHA or VA. Conventional loans include both conforming loans, which meet Fannie Mae and Freddie Mac guidelines, and nonconforming loans.
A jumbo loan is simply a conventional mortgage that exceeds conforming loan limits set by the Federal Housing Finance Agency (FHFA). Because jumbo loans cannot be purchased by Fannie Mae or Freddie Mac, they usually have stricter qualification requirements.
Understanding how loan limits, rates, down payments, and underwriting differ can help borrowers choose the right financing option.
Jumbo vs Conforming Loan Limits
Conforming loan limits determine whether a mortgage qualifies for purchase by Fannie Mae or Freddie Mac.
Loan limits vary by location and are adjusted periodically by the FHFA.
For 2026, typical limits are approximately:
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Property Type
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Loan Limit
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Most counties
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About $832,750
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High-cost counties
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Up to about $1,249,125
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Multi-unit properties
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Higher limits depending on unit count
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If your loan amount exceeds the local conforming limit, the mortgage is considered a jumbo loan.
High-balance conforming loans exist in expensive housing markets, allowing borrowers to stay within conforming guidelines even at higher loan amounts.
Jumbo vs Conventional Conforming Mortgage Rates
Having a jumbo loan doesn’t automatically mean higher rates. Interest rates for jumbo and conforming loans often move closely together.
In some market conditions, jumbo rates may be slightly higher because lenders assume more risk. In other cases, strong borrower profiles and lender competition can result in jumbo rates that are similar to, or even slightly lower than, conforming rates.
Here’s a breakdown of jumbo and conventional conforming rates cost.
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Factor
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Conforming Loan
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Jumbo Loan
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Interest rate
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Market average for conforming mortgages
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Often near conforming rates
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Origination costs
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Standard lender fees
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Sometimes higher fees
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Appraisal requirements
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Usually one appraisal
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May require additional valuation
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PMI
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Required if down payment is below 20%
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Typically not used
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Because jumbo loans cannot be sold to Fannie Mae or Freddie Mac, lenders may apply additional underwriting standards.
Credit Score, Down Payment, and DTI Requirements
Conforming loans generally allow more flexible qualification requirements, while qualifying for a jumbo loan can be more differ.
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Requirement
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Conforming Loan
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Jumbo Loan
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Minimum credit score
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Around 620
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Often 700 or higher
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Down payment
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As low as 3% for some programs
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Commonly 10% or higher
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Debt-to-income ratio
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Often up to about 45% to 50%
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Commonly around 38% to 43%
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Borrowers with higher credit scores and larger down payments usually qualify for better rates in both loan categories.
Cash Reserves and Documentation
Jumbo mortgages often require stronger financial reserves.
Cash reserves refer to liquid funds available after closing that demonstrate a borrower’s ability to continue making payments.
Typical expectations include:
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Requirement
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Conforming Loan
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Jumbo Loan
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Cash reserves
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Sometimes minimal or waived
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Often 6 to 12 months of payments
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Documentation
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Standard income and asset verification
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More detailed asset and income review
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Underwriting
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Often automated underwriting systems
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Frequently manual underwriting
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Self-employed borrowers or applicants with complex finances may face additional documentation requirements for jumbo loans.
Mortgage Insurance and Loan-to-Value Guidelines
Private mortgage insurance (PMI) helps protect lenders when borrowers make smaller down payments.
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Feature
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Conforming Loan
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Jumbo Loan
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Minimum down payment
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As low as 3%
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Often 10% or more
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PMI requirement
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Required below 20% down
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Typically not required
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Maximum LTV
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Up to about 97%
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Often capped around 80–90%
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For conforming loans, PMI can usually be removed once the loan balance reaches about 80% of the home’s value.
Pros and Cons of Conforming Conventional Loans
Conforming conventional loans generally have lower minimum down payment options, more flexible credit requirements, standardized underwriting guidelines, and more availability as a whole.
They do require PMI depending on your down payment, but that is removed once you build up enough equity.
Pros and Cons of Jumbo Loans
Jumbo loans allow financing for high-value properties, have no PMI, and offer competitive rates for qualified borrowers.
But they come with drawbacks, including higher credit and documentation requirements, higher down payment expectations, and more limited lender availability.
The Bottom Line
Jumbo loans are simple conventional loans above the conforming limits set by the FHFA. Compared to conventional conforming loans, they generally require higher down payments and credit scores.
Frequently Asked Questions
What is the difference between jumbo and conventional loans?
A jumbo loan exceeds the conforming loan limit set by the FHFA, while conforming conventional loans fall within those limits and can be purchased by Fannie Mae or Freddie Mac.
What are conforming loan limits in 2026?
For most counties, the limit is roughly $832,750 for a single-unit property, with higher limits in designated high-cost housing markets.
Do jumbo loans have higher interest rates?
Sometimes, but not always. Rates can be similar to conforming loans depending on market conditions and borrower qualifications.
What credit score is required for a jumbo loan?
Many lenders prefer credit scores around 700 or higher, although exact requirements vary.
Can I avoid PMI with a jumbo loan?
Most jumbo loans do not require private mortgage insurance, but lenders often require larger down payments or stronger financial reserves instead.
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