{"id":331305,"date":"2025-02-06T05:33:34","date_gmt":"2025-02-06T10:33:34","guid":{"rendered":"https:\/\/www.houzeo.com\/blog\/?p=331305"},"modified":"2025-02-11T04:55:38","modified_gmt":"2025-02-11T09:55:38","slug":"jumbo-vs-conventional-loan","status":"publish","type":"post","link":"https:\/\/www.houzeo.com\/blog\/jumbo-vs-conventional-loan\/","title":{"rendered":"Jumbo vs. Conventional Loan: How Are They Different?"},"content":{"rendered":"\n<p>Jumbo loans are essentially conventional loans. However, because they fall above FHFA loan limits and don&#8217;t have the government&#8217;s backing, they&#8217;re known as non-conforming loans. Last year, jumbo loans had a market share of <a href=\"https:\/\/www.scotsmanguide.com\/residential\/2023-top-jumbo-originators\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">32%<\/a>.<\/p>\n\n\n\n<p>The maximum loan limit for conforming loans for a single unit is between <a href=\"https:\/\/singlefamily.fanniemae.com\/originating-underwriting\/loan-limits\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">$766,550 and $1,149,825<\/a>, depending upon the location. If you wish to purchase a house that costs more than the above figure, then applying for a jumbo loan would be a wise decision.<\/p>\n\n\n\n<div class=\"block-takeaways\" style=\"margin-top:20px !important\"><p class=\"topHead\"><\/p><p class=\"headKeytake\">\ud83d\udcc9<b> Jumbo vs. Conventional Mortgage\n<\/b><\/p>\n<ul>\n<li>As of December 2023, the average 30-year and 15-year fixed mortgage APR for jumbo loans is <a href=\"https:\/\/www.bankrate.com\/mortgages\/jumbo-loan-rates\/?mortgageType=Purchase&amp;partnerId=br3&amp;pid=br3&amp;pointsChanged=false&amp;purchaseDownPayment=391560&amp;purchaseLoanTerms=30yr%2C5-1arm%2C5-6arm&amp;purchasePoints=All&amp;purchasePrice=1&amp;purchasePropertyType=SingleFamily&amp;purchasePropertyUse=PrimaryResidence&amp;searchChanged=false&amp;ttcid&amp;userCreditScore=780&amp;userDebtToIncomeRatio=0&amp;userFha=false&amp;userVeteranStatus=NoMilitaryService&amp;zipCode=400607\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">7.54%<\/a> and 6.85%, respectively.\n<\/li>\n<li>It&#8217;s harder to get a jumbo loan than a conventional loan due to its size and strict underwriting process.<\/li>\n<li>Conventional loans have lenient guidelines and lower requirements compared to jumbo loans.\n<\/li><\/ul> \n<\/div>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"jumbo-loan-vs-conforming-loan\"><strong>Differences Between Jumbo and Conventional Loan<\/strong><\/h2>\n\n\n\n<p>There are two <a href=\"https:\/\/www.houzeo.com\/blog\/types-of-home-loans\/\" target=\"_blank\" rel=\"noreferrer noopener\">types of loans<\/a>, conforming and non-conforming loans. Jumbo loans and conventional loans fall into these categories.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Conforming Loans:<\/strong> This is a type of mortgage that meets the loan limits of the <a href=\"https:\/\/www.fhfa.gov\/Media\/PublicAffairs\/Pages\/FHFA-Announces-Conforming-Loan-Limits-for-2023.aspx\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">FHFA<\/a>.<\/li><li><strong>Non-conforming Loans:<\/strong> These are the types of loans that are not backed by GSEs hence, they don&#8217;t have any loan limits. Moreover, they cannot be sold to Fannie Mae and Freddie Mac.<\/li><\/ul>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\" id=\"what-is-a-jumbo-mortgage-loan\"><strong>What Are Jumbo Loans?<\/strong><\/h3>\n\n\n\n<p>Jumbo loans are also non-conforming loans, like <a href=\"https:\/\/www.houzeo.com\/blog\/portfolio-loan\/\" target=\"_blank\" rel=\"noreferrer noopener\">portfolio loans<\/a>. Most people opt for them to get large amounts of money that exceed FHFA loan limits. However, It&#8217;s riskier than conforming conventional loans, as the mortgage has no guarantee or insurance.<\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>What Are Conventional Loans?<\/strong><\/h3>\n\n\n\n<p><a href=\"https:\/\/www.houzeo.com\/blog\/conventional-loan\/\" target=\"_blank\" rel=\"noreferrer noopener\">Conventional mortgages<\/a> are those that meet the loan limits set by GSEs like Fannie Mae and Freddie Mac. However, they don&#8217;t have the backing of government agencies.<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"comparison\"><strong>Jumbo vs. Conventional Loan: A Comparison<\/strong><\/h2>\n\n\n\n<p>Here is a comparison between <a href=\"https:\/\/www.houzeo.com\/blog\/jumbo-loan\/\" target=\"_blank\" rel=\"noreferrer noopener\">jumbo loans<\/a> and conventional loans based on their requirements:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Qualifications<\/strong><\/td><td><strong>Jumbo Loans<\/strong><\/td><td><strong><strong>Conventional Loans<\/strong><\/strong><\/td><\/tr><tr><td><strong>Maximum Loan Amount (1 unit)<\/strong><\/td><td>Multiple Million Dollars<\/td><td>$766,550 to $1,149,825 (depending on the location) <\/td><\/tr><tr><td><strong>Down Payment<\/strong><\/td><td>20% or more<\/td><td>3% to 20%<\/td><\/tr><tr><td><strong>LTV Ratio<\/strong><\/td><td>Less or equal to 89.99%<\/td><td>Less or equal to 97%<\/td><\/tr><tr><td><strong>Maximum Debt-to-Income Ratio<\/strong><\/td><td>45%<\/td><td>50%<\/td><\/tr><tr><td><strong>Credit Score<\/strong><\/td><td>680 or higher<\/td><td>Preferably 620<\/td><\/tr><tr><td><strong>Cash Reserves<\/strong><\/td><td>Up to 12 months<\/td><td>Up to 6 months<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"jumbo-loan-rates-vs-conventional\"><strong>Interest Rates on Jumbo and Conventional Loans<\/strong><\/h2>\n\n\n\n<p>You are likely to pay higher interest on a jumbo mortgage than on a conventional loan. This is simply because jumbo loans allow you to borrow more money but can be a risky investment for the lender. However, in some cases, you may get lower interest rates than conventional loans.<\/p>\n\n\n\n<p>The difference between the interest rates on both types of loans is largely due to market conditions, and it is typically between 0.25% and 1%.<\/p>\n\n\n\n<p>To get a clearer picture of how these interest rates impact your monthly payments, use a <a href=\"https:\/\/www.houzeo.com\/mortgage-calculator\" target=\"_blank\" rel=\"noreferrer noopener\">mortgage payment calculator<\/a>. This tool can help you estimate your monthly payments, including interest, taxes, and insurance, and give you a better idea of what to expect financially with either loan type.<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"Pros-and-Cons-of-a-Jumbo-Loan\"><strong>Pros and Cons of a Jumbo Loan<\/strong><\/h2>\n\n\n\n<p>Like every other loan, a jumbo loan has its pros and cons.<\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\" id=\"are-jumbo-loan-rates-higher\"><strong>Pros<\/strong>\u2705<\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>It allows you to borrow a larger amount.<\/li><li>It helps you get a competitive interest rate.<\/li><li>It enables you to buy a bigger home. <\/li><\/ul>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\" id=\"Cons\"><strong>Cons<\/strong>\u274c<\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>You&#8217;re liable to pay higher monthly <a href=\"https:\/\/www.houzeo.com\/blog\/average-mortgage-payment\/\" target=\"_blank\" rel=\"noreferrer noopener\">mortgage payments<\/a>.<\/li><li>It requires excellent creditworthiness.<\/li><li>It requires a larger down payment.<\/li><\/ul>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"Pros-and-Cons-of-a-Conventional-Loan\"><strong>Pros and Cons of a Conventional Loan<\/strong><\/h2>\n\n\n\n<p>It&#8217;s advisable to go through the pros and cons of a conventional loan before opting for it.<\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>Pros<\/strong>\u2705<\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Conventional loans offer a minimum down payment of 3%.<\/li><li>It has low credit score requirements.<\/li><li>It benefits the buyer with monthly mortgage payments.<\/li><\/ul>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>Cons<\/strong>\u274c<\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>It requires <a href=\"https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/\" target=\"_blank\" rel=\"noreferrer noopener\">private mortgage insurance<\/a> to put down less than 20%.<\/li><li>Offers high interest rates in the case of low credit scores.<\/li><li>It comes with stricter debt-to-income requirements.<\/li><\/ul>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\"><strong>Bottom Line<\/strong><\/h2>\n\n\n\n<p>A jumbo loan is a plausible option if you don&#8217;t qualify for conventional loan limits. However, it can be tough to qualify for a jumbo loan. This is because it has a strict underwriting process and different loan requirements. <\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\"><strong>Find Your New Home With Houzeo<\/strong><\/h2>\n\n\n\n<p>With thousands of property listings, Houzeo.com is one of the biggest property listing sites in the US. Find condos, townhouses, co-ops, and other types of <a href=\"https:\/\/www.houzeo.com\/homes-for-sale\" target=\"_blank\" rel=\"noreferrer noopener\">homes for sale<\/a> on Houzeo.<\/p>\n\n\n\n<p class=\"margin-top-15\"><strong>\u00bb Need More Clarity?&nbsp;<\/strong>Read these exclusive&nbsp;<a href=\"https:\/\/www.realestatequeen.com\/houzeo-reviews\/\" target=\"_blank\" rel=\"noreferrer noopener\">Houzeo reviews<\/a>&nbsp;and learn why the platform is the best in America\u2019s competitive housing market.<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"faq\"><strong>Frequently Asked Questions<\/strong><\/h2>\n\n\n\t\t<div class=\"wp-faq-schema-wrap wp-faq-schema-accordion\">\n\t\t\t\t\t\t<div class=\"wp-faq-schema-items\">\n\t\t\t\t\t\t\t\t\t<p class=\"ui-accordion-header\">\n\t\t\t\t\t\tDo jumbo loans have lower interest rates?\t\t\t\t\t\t<span class=\"ui-accordion-header-icon ui-icon ui-icon-triangle-1-s\"><\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\t<div class=\"ui-accordion-content\">\n\t\t\t\t\t\t<p>Lenders keep competitive <a href=\"https:\/\/www.houzeo.com\/blog\/mortgage-interest-rates-forecast\/\" target=\"_blank\" rel=\"noreferrer noopener\">interest rates<\/a> for jumbo loans. Because of this and\u00a0market conditions, it is possible to get lower interest rates on a jumbo loan than on a conforming loan.<\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<p class=\"ui-accordion-header\">\n\t\t\t\t\t\tIs it harder to qualify for a jumbo loan than for a conventional loan?\t\t\t\t\t\t<span class=\"ui-accordion-header-icon ui-icon ui-icon-triangle-1-s\"><\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\t<div class=\"ui-accordion-content\">\n\t\t\t\t\t\t<p>Yes, it can be harder to <a href=\"https:\/\/www.houzeo.com\/blog\/qualifying-for-a-mortgage\/\" target=\"_blank\" rel=\"noreferrer noopener\">qualify<\/a> for a jumbo loan because they're larger and pose a higher risk for the lender.<\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<p class=\"ui-accordion-header\">\n\t\t\t\t\t\tDo jumbo loans require PMI?\t\t\t\t\t\t<span class=\"ui-accordion-header-icon ui-icon ui-icon-triangle-1-s\"><\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\t<div class=\"ui-accordion-content\">\n\t\t\t\t\t\t<p>Since jumbo loans require a higher <a href=\"https:\/\/www.houzeo.com\/blog\/what-is-a-down-payment\/\" target=\"_blank\" rel=\"noreferrer noopener\">down payment<\/a> of 20% or more, they typically don't require\u00a0private mortgage insurance.<\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\n","protected":false},"excerpt":{"rendered":"<div class=\"new-excerpt\"><p class=\"small-desc\">A jumbo loan is a conventional loan. However, it's different from most conventional loans because it's a non-conforming...<\/p><\/div><div class=\"reading_date\"><span class=\"readtime\">4 mins read<\/span><span class=\"date\">Feb 06, 2025<\/span><\/div>","protected":false},"author":119,"featured_media":426128,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[30787,30785,30784,30788,30786],"class_list":["post-331305","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-are-jumbo-loan-rates-higher","tag-current-jumbo-loan-rates","tag-jumbo-loan-definition","tag-jumbo-mortgage-rates-versus-conventional","tag-lowest-jumbo-mortgage-rates"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Jumbo vs. Conventional Loan: How Are They Different?<\/title>\n<meta name=\"description\" content=\"A jumbo loan is a conventional loan. However, it&#039;s different from most conventional loans because it&#039;s a non-conforming loan.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.houzeo.com\/blog\/jumbo-vs-conventional-loan\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Jumbo vs. Conventional Loan: How Are They Different?\" \/>\n<meta property=\"og:description\" content=\"A jumbo loan is a conventional loan. However, it&#039;s different from most conventional loans because it&#039;s a non-conforming loan.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.houzeo.com\/blog\/jumbo-vs-conventional-loan\/\" \/>\n<meta property=\"og:site_name\" content=\"Houzeo Blog\" \/>\n<meta property=\"article:published_time\" content=\"2025-02-06T10:33:34+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-02-11T09:55:38+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/11\/Jumbo-Vs-Conventional-Loan_-A-Detailed-Comparison.webp\" \/>\n\t<meta property=\"og:image:width\" content=\"810\" \/>\n\t<meta property=\"og:image:height\" content=\"435\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/webp\" \/>\n<meta name=\"author\" content=\"Aditya Agarwal\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Aditya Agarwal\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Jumbo vs. Conventional Loan: How Are They Different?","description":"A jumbo loan is a conventional loan. However, it's different from most conventional loans because it's a non-conforming loan.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.houzeo.com\/blog\/jumbo-vs-conventional-loan\/","og_locale":"en_US","og_type":"article","og_title":"Jumbo vs. Conventional Loan: How Are They Different?","og_description":"A jumbo loan is a conventional loan. However, it's different from most conventional loans because it's a non-conforming loan.","og_url":"https:\/\/www.houzeo.com\/blog\/jumbo-vs-conventional-loan\/","og_site_name":"Houzeo Blog","article_published_time":"2025-02-06T10:33:34+00:00","article_modified_time":"2025-02-11T09:55:38+00:00","og_image":[{"width":810,"height":435,"url":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/11\/Jumbo-Vs-Conventional-Loan_-A-Detailed-Comparison.webp","type":"image\/webp"}],"author":"Aditya Agarwal","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Aditya Agarwal","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.houzeo.com\/blog\/jumbo-vs-conventional-loan\/","url":"https:\/\/www.houzeo.com\/blog\/jumbo-vs-conventional-loan\/","name":"Jumbo vs. Conventional Loan: How Are They Different?","isPartOf":{"@id":"https:\/\/www.houzeo.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.houzeo.com\/blog\/jumbo-vs-conventional-loan\/#primaryimage"},"image":{"@id":"https:\/\/www.houzeo.com\/blog\/jumbo-vs-conventional-loan\/#primaryimage"},"thumbnailUrl":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/11\/Jumbo-Vs-Conventional-Loan_-A-Detailed-Comparison.webp","datePublished":"2025-02-06T10:33:34+00:00","dateModified":"2025-02-11T09:55:38+00:00","description":"A jumbo loan is a conventional loan. However, it's different from most conventional loans because it's a non-conforming loan.","inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.houzeo.com\/blog\/jumbo-vs-conventional-loan\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.houzeo.com\/blog\/jumbo-vs-conventional-loan\/#primaryimage","url":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/11\/Jumbo-Vs-Conventional-Loan_-A-Detailed-Comparison.webp","contentUrl":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/11\/Jumbo-Vs-Conventional-Loan_-A-Detailed-Comparison.webp","width":810,"height":435,"caption":"Jumbo Vs Conventional Loan_ A Detailed Comparison"},{"@type":"WebSite","@id":"https:\/\/www.houzeo.com\/blog\/#website","url":"https:\/\/www.houzeo.com\/blog\/","name":"Houzeo Blog","description":"","publisher":{"@id":"https:\/\/www.houzeo.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.houzeo.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.houzeo.com\/blog\/#organization","name":"Houzeo","url":"https:\/\/www.houzeo.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.houzeo.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2020\/07\/new-logo.png","contentUrl":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2020\/07\/new-logo.png","width":190,"height":55,"caption":"Houzeo"},"image":{"@id":"https:\/\/www.houzeo.com\/blog\/#\/schema\/logo\/image\/"}}]}},"_links":{"self":[{"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/posts\/331305","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/users\/119"}],"replies":[{"embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/comments?post=331305"}],"version-history":[{"count":82,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/posts\/331305\/revisions"}],"predecessor-version":[{"id":686083,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/posts\/331305\/revisions\/686083"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/media\/426128"}],"wp:attachment":[{"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/media?parent=331305"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/categories?post=331305"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/tags?post=331305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}