If you’re looking to buy a home, choosing the right mortgage lender can save you money. That’s especially true if you’re planning on taking out a larger jumbo loan. Jumbo mortgages typically come with higher interest rates than conforming loans, and also have stricter eligibility requirements, so it’s crucial to compare lenders and shop around to get the best deal.
To help you get started in your search, here is our guide to the best jumbo mortgage lenders in 2021.
To determine the best jumbo mortgage lenders, Bankrate evaluated lenders based on several criteria, including accessibility; cost (competitive jumbo loan rates and low or no fees); and expediency (approval and closing times).
Best jumbo mortgage lenders
Better.com is a fully digital mortgage lender that offers jumbo loans and several other mortgage products in 43 states and Washington, D.C. The lender can get you preapproved in just three minutes and close a loan in as little as 21 days. By comparison, the average time to close a purchase loan is 57 days as of January 2021, according to ICE Mortgage Technology.
Better.com also doesn’t charge lender fees or commissions, which can save you $3,500 on average, according to the lender. Plus, if you get a better offer from another lender, you can send the loan estimate to Better.com, and it’ll match that offer and give you $100 — or, if it can’t match it, give you $100 anyway.
The lender doesn’t offer VA or USDA loans, however, so if that’s the type of jumbo loan you’re looking for, you’ll need to look elsewhere. Also, Better.com doesn’t disclose its jumbo loan eligibility requirements on its website, so you’ll need to apply to find out if you qualify.
LowRates.com offers jumbo loans in 48 states (not Georgia or Massachusetts) and Puerto Rico. The lender offers a long list of loan options, so you’ll have some flexibility if you need it. Like other lenders, LowRates.com offers quick closings, with the potential of closing within 20 days.
The lender requires a minimum credit score of 700 to be eligible for a jumbo loan, which is standard for the industry. The maximum debt-to-income (DTI) ratio requirement is 43 percent, which can be more restrictive compared to other types of loans and lenders.
LowRates.com has branch locations in 16 states, where you can apply in person, and it also allows you to apply over the phone.
Navy Federal Credit Union
Navy Federal Credit Union primarily serves the military community, so it can be difficult to join and gain access to its many banking and loan services, which include jumbo loans.
That said, if you qualify to be a member, the credit union makes it worth your while. For one, Navy Federal Credit Union offers a generous rate match guarantee: If you lock your rate with the credit union and then provide a better offer from another lender within three days, the credit union will either match the offer or give you $1,000 once you close your loan with the competitor. In addition, if interest rates drop within 60 days after you lock yours in, you can relock your rate up to two times for free.
According to the credit union, it typically takes 30 days to close once you’ve submitted all your paperwork. Navy Federal Credit Union doesn’t provide information upfront about what you need to be eligible for a jumbo loan, but the lender advertises a competitive 30-year jumbo loan rate (as of March 3, 2021), so it could make sense to explore whether you qualify.
Another potential downside: The lender doesn’t offer FHA or USDA loans.
Another online mortgage lender, Rocket Mortgage offers loans in all 50 states and Washington, D.C., making it the most accessible lender on this list.
While Rocket Mortgage doesn’t specifically publicize its credit score requirements for a jumbo loan, it does recommend having a score between 700 to 740, depending on the size of the loan. Its DTI ratio requirements range from 38 percent to 43 percent.
Closing can take between 30 to 45 days, which is on the longer side, but that’s still better than the average.
Unlike other lenders on this list, Rocket Mortgage doesn’t offer a rate match guarantee, and you won’t get a break on lender fees either. If you live in one of the states where our other best jumbo mortgage lenders don’t operate, however, it can be an excellent option to consider.
Jumbo loan vs. conventional loan
A conventional loan is a mortgage that’s not guaranteed or insured by the government. As such, most jumbo loans are conventional loans.
However, conventional loans can be either conforming or nonconforming, which is where the difference lies when comparing jumbo loans to conventional ones. Conforming loans are required to meet loan limits set by Fannie Mae and Freddie Mac. For most of the U.S. in 2021, that limit is $548,250, but if you live in a high-cost area, it increases to $822,375. Nonconforming loans — jumbo loans — exceed these limits.
Jumbo loans also typically charge higher interest rates than conforming loans — generally 0.25 percent to 1 percent higher.
What are the requirements for a jumbo loan?
Because you’re borrowing an amount that’s greater than what’s acceptable for a conforming loan, jumbo loans typically have stricter eligibility requirements. For example, credit score requirements can be much higher, and while a 20 percent down payment is often recommended for a conforming loan, it can actually be a requirement for a jumbo loan.
In some cases, you might be able to get a jumbo loan with a lower down payment — sometimes 10 percent — but it could come with the added expense of mortgage insurance premiums to compensate.
Each mortgage lender has a different set of criteria, so it’s important to shop around and compare loan terms and eligibility requirements to find the best fit for you.
What is the minimum credit score for a jumbo loan?
It depends on the mortgage lender, but the minimum credit score for a jumbo loan is generally 700 or higher. One major exception is a VA jumbo loan, which you might be able to get with a credit score in the mid- or even low-600s.
In addition to your credit score, lenders will also review your DTI ratio. It’s important to have a low DTI ratio, but even more so for a jumbo loan, in order to ensure your ability to repay. The DTI ratio for conforming loans is usually a maximum of 50 percent, but for a jumbo loan, it can be 38 percent to 43 percent.
How to choose the best jumbo loan lender
Before you start comparing mortgage lenders, it’s important to make sure your finances and credit file are in good standing. Regardless of what lenders have to offer, you’ll get the best loan terms if your credit score is high, your DTI ratio is low, and you have a large down payment.
As you shop around, be sure to apply with multiple jumbo loan lenders to get quotes on interest rates and closing costs. You might even consider working with a mortgage broker who can help you with this process.
With the rates and closing costs laid out side by side, you’ll be able to choose the best lender based on what they have to offer. You might also be able to use this information to negotiate with lenders to cut their rates or costs to a more favorable level.
Take your time with this process, because even a small decrease in your interest rate could save you tens of thousands of dollars, especially when you’re borrowing such a large sum of money.
How to apply for a jumbo loan
The process of applying for a jumbo loan is the same as a traditional mortgage loan. Start by submitting applications to at least three to five lenders that offer jumbo loans. You’ll need to submit documentation about your financial situation, which the lenders will then use to determine whether you qualify for a loan and what the terms will be.