How Jumbo Loans Work for Luxury Homebuyers

By Jason Starr

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Are you considering buying a luxury home with jumbo loan financing? I recently sat down with my longtime friend and trusted mortgage expert, Jen McCall from Total Mortgage, to talk through the ins and outs of jumbo loans. Here’s what we discussed.

What is a jumbo loan? It’s basically any loan that’s over the conforming loan limit. For 2025, that limit is $806,500. A common misconception is that this number refers to the home’s purchase price, but it’s actually about the loan amount. So, if your mortgage exceeds $806,500, you’re in jumbo territory.

Take note that jumbo loans don’t follow the typical guidelines that conforming loans do. They’re not insured by Fannie Mae or Freddie Mac, which gives each lender the freedom to set their own requirements. That doesn’t mean it’s harder to qualify. It just means the rules can vary more than you might expect.

What do lenders look for? Even though the guidelines differ by lender, they all look at similar things: your credit score, income, assets, and down payment. The main difference is what each lender sees as “good enough” for those things.

Are fees higher? It’s easy to assume that jumbo loans would come with extra costs, but Jen assured that fees and closing costs are usually comparable to conforming loans. It just depends on the lender you’re working with.

Why shopping around matters. Interest rates on jumbo loans tend to vary more than they do for conforming loans. Even a small difference, like an eighth of a percent, can make a huge impact on the life of your loan. It is strongly recommended to talk to multiple lenders.

What about paying in cash? There’s a recent trend where buyers who are hesitant to commit to a higher rate are using cash up front. Doing this lets them refinance and pull cash out once rates drop. It gives them flexibility without locking into a high rate right away.

I hope this helped clear up some of the mystery around jumbo loans and what to expect when you’re financing a higher-priced home. If you’re exploring your options or just want to run some numbers, you can reach out to Jen at jenmccall@totalmortgage.com. I’m also available to answer other questions you might have about real estate, so don’t hesitate to call me at 603-293-7227 or send an email to StarrRealtyNH@gmail.com. I’m happy to help.