Jumbo Loan Meaning Explained

When shopping for a home in today's market, you might encounter the term “jumbo loan” or “jumbo mortgage.” Of course, we all know that “jumbo” is another word for “massive,” but what is considered a jumbo loan when the housing market is already expensive? Keep reading to learn about jumbo home loans and how they work.

What Is a Jumbo Loan?

A jumbo loan is a type of mortgage that exceeds the loan limits set by the Federal Housing Finance Agency (FHFA). These jumbo home loans are designed for borrowers who need to finance expensive properties that go beyond conventional loan boundaries.

Loan limits vary by location. Today in 2025, the conforming loan limit is around $806,500 for most areas in the United States. However, in places where home prices are higher—like parts of California, New York, and Hawaii—the limit can go up to $1,209,750. Any mortgage amount above this baseline is classified as a jumbo loan. Unlike conforming loans, there isn’t a federally set jumbo loan limit. Instead, the maximum amount depends on the lender and the borrower’s financial profile.

In addition, jumbo mortgages cannot be purchased by government-sponsored enterprises like Fannie Mae or Freddie Mac. This makes them non-conforming loans. As a result, mortgage lenders must keep the loans on their books or sell them to private investors, which can affect how they are structured and priced.

How Does a Jumbo Loan Work?

Jumbo loans function much like conventional mortgages, especially in terms of repayment. Borrowers can choose fixed or adjustable mortgage rates and different repayment lengths. That being said, jumbo mortgage rates are typically higher than conventional loan rates. Why? Since jumbo home loans exceed conforming loan limits, they are considered riskier for lenders to take on. Lately though, the gap between jumbo and conventional mortgage rates is getting smaller, meaning the cost of borrowing is becoming more affordable for jumbo loans.

When it comes to financing high-value homes, borrowers have more options than you would think. In fact, there are multiple types of jumbo loans, and each one is designed to fit a different kind of borrower or financial situation:

• Fixed-Rate Jumbo Loans: The interest rate stays the same throughout the loan term (typically 15 to 30 years). These are ideal for borrowers who plan to live in their home for the long term and prefer predictable payments.
• Adjustable-Rate Jumbo Loans: It starts with a lower fixed rate for the initial 5 to 10 years, then it adjusts periodically based on market conditions. The ideal candidates are buyers who plan to sell or refinance their home before the rate adjusts.
• Interest-Only Jumbo Loans: You only pay interest for a specific period of time (usually 5-10 years) before your payments start to include both principal and interest. This option is great for borrowers with variable income or want lower payments in the beginning.
• Jumbo VA Loans: Available to eligible veterans and active-duty service members, jumbo VA mortgages may offer lower down payments and no PMI, even for high-value homes.
• Super Jumbo Loans: Designed for VERY high-value properties, typically starting at $1.5 million or more, these loans are often customized for high-net-worth individuals with unique financial profiles.
• Jumbo Refinance Loans: You can refinance existing jumbo mortgages for better terms or explore cash-out refi options.

Where to Get a Jumbo Home Loan:

At Academy Bank, we understand that purchasing a luxury home or property requires a financing solution that is anything but one-size-fits-all. Our priority is helping you find the right fit for your financial goals.

With flexible options and a team that truly understands jumbo lending, we make it easier to move forward with confidence. Here’s what sets us apart:

• Competitive Jumbo Loan Rates: We tailor our rates with care—because even a small difference can mean BIG SAVINGS on a high-value loan.
• Experienced Mortgage Specialists: Our loan officers specialize in jumbo home loans and can guide you through every detail.
• Streamlined Process: From application to approval, every step is smooth and painless.
• Local Expertise: We know the neighborhoods, market trends, and the jumbo loan limits specific to your area.

We are proud to offer jumbo loans in all 50 states! So, whether you are buying in your hometown or moving across the country, we are ready to help! To learn more about jumbo loan mortgage rates and jumbo loan eligibility, contact our mortgage lending team or visit our bank online today.

Explore Jumbo Loans

MORTGAGE CALCULATOR RESOURCES:
How to Calculate an Adjustable Rate Mortgage
15 vs. 30 Year Mortgage Rate Calculator
How to Calculate Conventional Mortgage Rate
Mortgage Refinance Calculator
How to Calculate Mortgage Payments
How to Calculate APR on a Mortgage