Current jumbo mortgage rates

What is a jumbo mortgage?

A jumbo loan covers a loan amount that exceeds the Fannie Mae and Freddie Mac limits. You might need a jumbo loan if you’re buying a mansion, or even if you’re buying a regular home in an expensive region such as Silicon Valley. You can use a jumbo loan to buy a primary home, an investment property or a vacation home. Maximum loan size and qualifying guidelines will vary depending on location and lender. In many cases, jumbo loan rates differ from conventional mortgage rates. Jumbo mortgages are more lucrative for lenders than conventional loans, but they’re also riskier, so requirements to qualify are more stringent. Besides these distinctions, jumbo loans are fairly similar to conventional loans.

How to get a jumbo mortgage

1. Make sure you qualify. You must clear three hurdles to qualify for a jumbo loan: a high income requirement, a stellar credit score and hefty reserves. Falling short in one of those categories will make it harder to land the best rate.
   • Regardless of your credit score, you’re at risk of having your application rejected if you have negative items on your credit report, such as missed or late payments, foreclosures and bankruptcies. You may be able to compensate for a lower credit score with a higher down payment.
   • Not only will you need a high income, you’ll need a reasonable debt-to-income ratio to qualify for a jumbo loan. Lenders want to make sure that your debt burden won’t make it difficult for you to pay your mortgage, especially if you fall on hard times.
   • The reserve requirements for a jumbo mortgage are significantly higher compared to conventional mortgages. Lenders will want to see 6-12 months of mortgage payments in the bank, in addition to sufficient funds to cover closing costs.
2. Gather documentation. Lenders will need proof of your income, credit history, and assets.
3. Shop around. Because jumbo loans aren’t as readily available as conforming loans, finding the best deal might take a bit more effort. Broaden your search to include brick-and-mortar lenders and mortgage brokers.
4. Expect a bit of extra scrutiny. Jumbo lenders are taking a big risk, so they might spend a bit more time examining your income, verifying your cash reserves and generally vetting your finances.

Read more: How to get a jumbo mortgage

Why compare jumbo mortgage rates?

When getting a jumbo loan (or really any kind of loan), it’s a good idea to shop around. Bankrate’s wide network of lenders helps you compare offers and score the best rate. Because a non-conforming loan is usually for such a large amount, getting the best rate can make a big difference in the amount of interest that you pay.

Be sure to check with local financial institutions as well, since sometimes community banks or credit unions can have good rates. It’s also a good idea to work with a mortgage broker who specializes in jumbo loans.

As you solicit quotes from lenders and brokers, make sure you provide information that’s as accurate as possible. Because your credit score is going to be a big determinant of your rate, review your credit report before you start shopping around. If you see errors, have them fixed as soon as possible.

Be prepared to answer questions about your liquid and non-liquid assets, as well as how much you can afford for your down payment. You should also have an accurate idea of your income and your debt levels (debt-to-income ratio). The more accurate your information, the more accurate your preliminary mortgage rate quote will be.

Should you get a jumbo mortgage?

The main upside of jumbo mortgages is that they expand your homeownership options. Large or unique homes, as well as typical homes in pricey areas, regularly have sticker prices well above conforming loan limits. So if you wanted to borrow $1 million against a $1.5 million home in Hawaii, you’d need a jumbo loan. You may even be able to get a competitive interest rate. A jumbo loan might be a good fit for you if you’d rather finance more of a home’s value as opposed to putting down more cash upfront.

That said, jumbo loans have significant downsides. Jumbo loans represent a meaningful credit risk, for one. The higher loan amount will also lead to higher closing costs. Down payment requirements are often higher as well, and due to the large loan amount, you’ll have to put a lot of money down upfront.

Jumbo mortgage FAQs

• When should you consider a jumbo mortgage?

  If you’re buying a high-priced house, and you’re able to qualify, a jumbo mortgage can be a good deal. For jumbo loans, lenders typically demand a stellar credit score, a spotless credit history and a down payment of 20 percent or more.

• How are jumbo mortgage rates set?

  As with other types of mortgages, lenders will evaluate factors like your credit score, payment history, savings, and income to determine your level of riskiness as a borrower. Your interest rate will be lower if you are perceived as more likely to repay the loan, and your rate will be higher if you are perceived as more likely to default.

  You can control your qualifying factors, but you can’t control the other factors that will determine your interest rate. Mortgage bond investors will raise rates during periods of inflation, since inflation reduces the value of a mortgage’s fixed payments over time. Amid the rampant inflation of 2022, it’s not a surprise that rates have now topped 6 percent, their highest level since 2008.

  Since rates are on the rise, you may consider a rate lock if you find a competitive rate.

• What are the benefits of a jumbo loan?

  The main benefit for borrowers is that a jumbo mortgage lets you borrow more than the limits imposed by Fannie and Freddie. For instance, if you’d like to borrow $1 million against a $1.5 million home, a jumbo loan makes it possible.

  Some borrowers prefer to finance more of the home’s cost rather than tying up cash, making the jumbo mortgage a helpful financial tool and part of an overall investment strategy. You can still get a competitive interest rate and finance the home of your choice without being restricted by the dollar limit on conforming mortgages.

• What is the difference between a 15 and 30-year jumbo loan?

  Interest rates for 15-year fixed jumbo mortgage loans are usually somewhat lower than those for 30 years. Of course, monthly payments on 15-year jumbos — already high because of the values of the property involved — are considerably higher compared to a 30-year loan, because the payment schedule is compressed into half the time. But you’ll finish paying sooner, and your total borrowing costs will be lower.

• How is the mortgage process different with a jumbo loan

  To get one of these large mortgages, you’ll probably have to jump through a few extra hoops. For instance, you’ll need to show you have a jumbo-sized salary and that you’ve saved enough to make the larger down payment, (as a percentage of the total amount financed) than is required for a conforming loan. Lenders often require a 20 percent down payment for jumbo loans, compared with as little as 5 percent — or sometimes less — for a conforming mortgage.

  You’ll also probably need a better credit score. With a conforming loan, you might be able to get approved even with a credit score as low as 500. But for a jumbo loan, 700-plus is often required because lenders need assurance that you will be able to responsibly keep up with the high payments involved, especially because the lender assumes more risk with this kind of loan.

  Additionally, you might need to go through a more rigorous vetting process for your income and assets with a jumbo mortgage. Depending on the lender requirements, it might take longer to close on a non-conforming loan than it would to close on a conforming loan.

Learn more about jumbo mortgages

• Jumbo loan basics
• Bankrate's best jumbo mortgage lenders
• Differences between conforming and jumbo loans
• Compare mortgage lenders