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Conventional vs. jumbo loans

Which home financing option is better ultimately depends on your property's cost.


Fact checked

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.

What’s the difference between a jumbo and conventional loan?

Conventional loans differ from jumbo loans in key ways that include how they’re backed and how much property you can buy with them.

Conventional loanJumbo loan
Maximum loan amounts$510,400 and up to $765,600 in high-cost areas$3 million
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 3.75% to 4.89%Generally 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%

Learn more about Conventional loans

Learn more about Jumbo loans

Maximum loan amounts

A typical conventional loan backed by Fannie Mae and Freddie Mac caps at $510,400, but can go as high as $765,600 in high-cost areas. A jumbo loan’s maximum amount is $3 million.

Credit score requirements

Most lenders require at least a 620 FICO score to qualify for a conventional loan, but jumbo loans can be tougher to qualify for. Some lenders will consider a FICO score of 680, but you’ll more likely need a score between 700 and 720 to be considered for a jumbo loan.

Interest rates

Interest rates for conventional loans are affected by market conditions and can be negotiated with your lender, but tend to range from 3.75% to 4.89%. Jumbo loan rates typically are from 0.5% to 1.5% higher than what you could get on a conventional loan.

Minimum downpayments

A conventional loan requires private mortgage insurance (PMI) if you can’t come up with a 20% down payment, but if you’re willing to pay PMI, the minimum you’ll need is 3%.

The higher loan amount of a jumbo loan requires more of a down payment. You may be able to find a loan with a 10% down payment minimum, but it’s more likely that you’ll be required to pay 20% down.

Bottom line

Jumbo loans offer one convenient payment for luxury or high-value properties. 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.

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 multiple mortgages. By splitting your loan amount among multiple lenders, you can circumvent some of the strict requirements of a jumbo loan.

As with any major purchase, shop around and weigh your options when deciding whether take out a mortgage.

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