Jumbo home loans: What you need to know

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Is your home feeling like a tight fit these days? Are you itching for a lifestyle upgrade? Whether you’re searching for a nicer neighborhood, better schools or just more space, upgrading your home can carry a hefty price tag — especially in a hot housing market.

As you curate your must-have list for your next home, keep in mind that your mortgage options may vary depending on the sale price. A traditional mortgage loan, for example, limits the amount of funds you can borrow to $647,200. With typical home prices soaring in many markets — and increasing by nearly 20% last year in Oregon — a growing number of buyers may need to venture into jumbo loan territory. 

A jumbo home loan is a specialized type of mortgage that allows you to take on a higher balance than a typical home loan will permit. While it may sound intimidating, a jumbo loan isn’t all that different from a regular mortgage.

What is a jumbo loan?

The main difference between a jumbo loan and a typical mortgage is the amount you’re borrowing. Standard mortgages are limited to an amount known as the conforming loan limit. As of 2021, the conforming loan limit is $647,200 in most areas. Buyers who need to finance more than that will require a jumbo loan.

Because they fall outside of federal loan restrictions, jumbo loans are not backed by government-sponsored organizations such as Fannie Mae or Freddie Mac. That means lenders must shoulder more risk, which can result in higher interest rates and stricter credit requirements.

What makes OCCU jumbo loans unique?

OCCU jumbo home loans are unique in comparison to other lenders. While most lenders require a 20 to 30 percent down payment, which can make it difficult for homebuyers to qualify — we offer competitive rates often lower than standard conforming loan rates. We also require as little as 3 percent down.* Check out our helpful mortgage calculator to plug in numbers and get a sense of costs.

Who qualifies for a jumbo mortgage?

Since jumbo loans are larger and can be viewed as riskier, they typically have stricter underwriting criteria. Lenders may require:

  • FICO score above 680.

  • Enough cash reserves to cover one year of mortgage payments.
  • Lower debt-to-income ratio.
  • Extensive documentation proving your financial health.

Do jumbo loans have higher rates?

People often assume jumbo loans have higher interest rates than standard home loans. While that used to be true for many lenders, these days interest rates on jumbo loans are now more comparable to those of conventional loans. In some cases, they can even be lower. Many homebuyers may be able to purchase a pricier home without a much higher interest rate. 

At OCCU, homebuyers with a high income and strong credit history may qualify for interest rates comparable to a traditional mortgage. We’re one of the few lenders to offer a reasonably priced fixed-rate option on our jumbo mortgages. Many lenders offer only adjustable rate jumbo loans, which means your mortgage rate rises whenever the national interest rate goes up. As home prices continue to escalate, many homes are becoming too expensive for a standard mortgage. And with interest rates due to rise nationwide, locking in your rate soon will help ensure you get the most value from your mortgage. Securing a jumbo loan now can help you compete in a challenging market.

As home prices continue to escalate, many homes are becoming too expensive for a standard mortgage. Jumbo loans can help homebuyers compete in a challenging market.

Curious if a jumbo home loan is the right option for you? Visit our jumbo home loans page to find out more.



*3% down payment on qualified 1-unit, primary properties.