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Conventional vs. jumbo loans

Which home financing option is better may not depend solely on your property's cost.

Jumbo loans enable you to borrow much more than conventional loans. But they can be more difficult to qualify for and typically come with higher interest rates.

How to know which is right for you

Conventional loans differ from jumbo loans in key ways that include how they’re backed and how much property you can buy with them. Understanding the differences can help you determine which loan will best meet your mortgage needs.

Conventional loanJumbo loan
Maximum loan amounts$548,250 and up to $822,375 in high-cost areasOften $3 million, but lender max amounts may vary
Credit scoreNo set minimum, but most lenders look for a FICO score of at least 620.At least 680, with most lenders requiring 700 to 720
Interest ratesGenerally 2.5% to 4%, depending on market conditionsGenerally 0.5% to 1.5% higher than a conventional loan
Minimum down paymentAs low as 3%As low as 10% but typically at least 20%
Loan typesFixed-rate and adjustable-rate (ARM)Fixed-rate and adjustable-rate (ARM)
Loan terms15- and 30-year terms are standard, but some lenders offer flexible terms15- and 30-year terms are typically the only options
PMITypically required unless your down payment is at least 20%Usually not required as this loan has high down payment requirements.
Backed by Freddie Mac or Fannie Mae?YesNo

Interest rates are higher for jumbo loans

Expect to pay up to 1.5% more in interest for a jumbo loan. This is because jumbo loans are riskier for the lender, given how much you’re borrowing. The difference between rates depends on market strength, the lender you use and your individual financial risk factors.

Choosing an ARM for your jumbo loan can save you money, as they typically start at a lower interest rate than a fixed-rate loan. But the rates fluctuate with the market, and you could end up paying a lot more if interest rates go up significantly.

You have a choice, even if your loan amount is high

Regardless of the amount you need to mortgage, a jumbo loan isn’t your only option. If your credit score is lower than 650 or you’re on the cusp of the conventional loan limit, it may be worth piggybacking loans or obtaining multiple mortgages. By splitting your loan amount among multiple lenders, you can circumvent some of the strict requirements of a jumbo loan and possibly get better interest rates.

Compare mortgage lenders and brokers

Compare top brands by home loan type, state availability and credit score. Select See rates to provide the lender with basic property and financial details for personalized rates.

Name Product Loan products offered State availability Min. credit score
Rocket Mortgage
(NMLS #3030)
Rocket Mortgage
Conventional, Jumbo, FHA, VA, Refinance
Available in all states
620
Streamline your mortgage from quote to final payment — all from your computer or phone.
AmeriSave
(NMLS #1168)
AmeriSave
Conventional, Jumbo, FHA, VA, USDA, Refinance
Not available in: NY
620
Great customer reviews and customized rate quotes in three minutes with no SSN needed.
Veterans United
(NMLS #1907)
Veterans United
Conventional, FHA, VA, USDA, Jumbo, Refinance
Available in all states
620
Veterans United stands out from other lenders for its focus on serving the military community.
Better
(NMLS #330511)
Better
Conventional, Jumbo, FHA, Refinance
Not available in: HI, MA, MN, NV, NH, VT, VA
620
Online preapproval in minutes and no origination fees with this direct lender.
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Compare up to 4 providers

Bottom line

Deciding how to finance a high-value property can be tricky. Jumbo loans offer one convenient payment, and sometimes it’s worth having one house payment without juggling multiple mortgages. However, a conventional loan typically comes with less stringent requirements and can offer stronger rates, which may make more financial sense in the long run.

As with any major purchase, taking the time to shop around is worth it to make sure you get the best deal for you.

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