What is a jumbo loan and when do you need one?

Last updated: May 08, 2026

Jumbo loans are mortgages that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). But how do you know if a jumbo loan is right for you?

The more you know about what a jumbo loan is, the better you can decide if one is right for you. Let’s take a look at what qualifies as a jumbo loan and what the benefits and requirements are so you can make a choice that supports your financial goals.

Jumbo mortgages are nonconforming loans, which means they don't meet the loan size requirements set by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac. In most cases, this is because the loan amount exceeds the conforming loan limits those organizations can buy.

Because jumbo mortgages are larger and generally can't be purchased by GSEs, they create higher risk for lenders. Lenders may scrutinize potential borrowers more closely during the application process.

For comparison, conforming loans meet GSE requirements. Lenders can sell conforming loans to GSEs, reducing the lender's risk and often resulting in better terms for the borrower.

Jumbo loans have several benefits including:

• Higher borrowing limits. Having a larger loan amount may give you more financial leverage if you’re buying a home in a high-cost area.
• Financing for a variety of property types. Jumbo loans can be used for primary residences, second homes and high-value properties.
• Competitive interest rates. Depending on market conditions and borrower qualifications, interest rates for jumbo mortgages can be comparable to conforming loans.
• Flexible loan options: Jumbo mortgages offer fixed-rate or adjustable-rate options and various loan terms, giving borrowers the flexibility to choose a structure that fits their goals. 

Jumbo loans tend to have different requirements than conforming loans because they create a higher risk for lenders. As a result, borrowers may need to meet higher standards to be approved for a jumbo loan.

• Higher down payment – Jumbo mortgages may require borrowers to pay at least a 20% down payment at closing to mitigate risk. Wells Fargo requires as little as 10.01% down.
• Credit and debt-to-income ratio (DTI) – Lenders may look for borrowers with good-standing credit scores and with low DTI. The thresholds for these requirements vary, so be aware of your credit profile and what your lender’s requirements may be.
• Cash reserves – To show lenders you can make consistent monthly payments on a jumbo loan, they may ask for detailed bank or tax statements for proof of income and/or cash reserves in your accounts. Borrowers may also qualify with retirement account assets or gift funds, depending on your lender’s conditions.

Loans from the U.S. Department of Veterans Affairs (VA) may be an option for qualifying service members. Learn more about VA loans.

Borrowers often aren’t required to pay PMI on jumbo loans because these mortgages typically require larger down payments. However, requirements vary by lender.

In general, jumbo loans may make sense for your situation if:

• You’re buying a high-value home or a home in a high-cost area.
• Your down payment meets the lender’s requirements for a jumbo loan.
• You have a strong credit history.
• You have a stable income and manageable debt.
• You're comfortable with higher loan amounts and monthly payments.

Wells Fargo customers can access jumbo mortgages with as little as 10.01% down — and no mortgage insurance is required. Learn more about our jumbo loan options and talk with a home mortgage consultant for details.

Wells Fargo customers may qualify for a closing cost credit or interest rate discount based on eligible assets. Learn more about our relationship benefits.