Jumbo Mortgage Rates

When you apply for a mortgage on a very expensive piece of real estate, your mortgage could be classified as a jumbo mortgage.

You’ll need a jumbo mortgage if you are borrowing more money than the local limits on a conforming loan. The specific dollar amount that determines whether a loan is a jumbo loan varies in different parts of the United States.

This guide will explain jumbo mortgage rates, how jumbo mortgages compare to other mortgage types, and what to consider when looking at jumbo loans.

In this guide:

• Average Rate for 30-Year Fixed Mortgages
• Mortgage Rates Over Time
• What is a Jumbo Fixed Rate Mortgage?
• Should I Consider a Jumbo Mortgage?
• Jumbo Mortgage Rates vs Conforming Rates
• Where Can I Find the Best Jumbo Mortgage Rates?

Average Rate for 30-Year Fixed Mortgages

Understanding average rates on conventional mortgages can be helpful to get an idea of what a mortgage might cost you. And comparing this average with the rates you’re offered will help you to see how your options stack up.

Although the average jumbo mortgage rates aren’t indexed by national mortgage lenders, the average 30-year mortgage rate is.

Average 30-year fixed mortgage rate	As of
3.55%	8/22/2019

Source: Federal Reserve Bank of St. Louis

Mortgage Rates Over Time

Here’s how conventional mortgage rates have changed over time.

What is a Jumbo Fixed Rate Mortgage?

Jumbo mortgages are home loans that exceed the limits for conforming mortgages set by the Federal Housing Finance Agency.

Across most of the country, this limit is $484,350, but in certain high-cost areas, such as Hawaii, the limit is $726,525 (this higher limit also applies to loans outside of the continental United States).

When you take out a jumbo loan, Fannie Mae or Freddie Mac will not buy the loan on the secondary mortgage market—as they would with most conforming loans.

Should I Consider a Jumbo Mortgage?

If you want to buy a new home and borrow above your local conforming loan limit, then you will not have a choice. Your mortgage will be classified as a jumbo loan because of the amount you are borrowing.

But before you buy a house that is this costly, you need to make sure you can afford the debt payments you are taking on. Buying a home that is unaffordable could put you at risk of foreclosure or make it hard to do other important things with your money.

>> Read More: How Much House Can I Afford?

Fortunately, to protect both borrowers and themselves, most lenders won’t allow this to happen. Mortgage lenders typically require you to have a debt-to-income ratio no higher than 43% in order to take out a mortgage loan. 

So if your monthly payments on all outstanding debts—including your mortgage—exceed 43% of your monthly income, you’ll have a hard time getting approved for a mortgage loan.

Jumbo Mortgage Rates vs Conforming Rates

The key difference between jumbo and conforming loans is the dollar-amount limit that applies to the loans. However, rates on jumbo and conforming mortgages are often different.

Historically, jumbo rates were higher than conforming rates because jumbo loans can’t be sold to Fannie Mae or Freddie Mac, so the lender has less liquidity and faces more risk. In recent years, however, jumbo loan rates have often been below conforming loan rates.

In California, for example, ConsumerFinance.gov reveals that rates for someone with a credit score between 700 and 719 borrowing $320,000 on a 30-year fixed-rate conventional mortgage would see rates between 2.750% and 4.500% (as of 3/10/2020).

Typical California Rates:

• Conforming: 2.750% – 4.500%
• Jumbo: 2.875% – 4.875%

However, if a borrower with the same credit score took out a 30-year fixed-rate jumbo loan to borrow $800,0000, rates would be between 2.875% and 4.875% (as of 3/10/2020).

That said, taking out a jumbo loan can cost you more even if the rate is lower because you have a larger principal balance that you’re paying interest on. And in circumstances where jumbo loan rates are higher, then you’d also be paying more for each dollar borrowed.

Where Can I Find the Best Jumbo Mortgage Rates?

When you are buying a costly home, it is especially important to shop around for an affordable loan. That’s because the more you borrow, the more your loan costs you over time.

>> Read More: Best Jumbo Mortgage Lenders

You should get pre-qualified quotes from several of the best mortgage lenders, so you can compare quotes and find the lender that offers the best rates for your situation.

Jumbo loan or not, your own mortgage rates will also be affected by:

• Your credit history and FICO credit score
• Your income
• The down payment amount
• The loan term
• The location you’re buying in
• Whether the home will be your primary residence
• Your loan type (adjustable-rate or fixed-rate)
• Other financial factors 

You can also use our mortgage loan calculator to see the impact of different mortgage rates, down payments, and loan amounts on your total home buying costs.