Jumbo Loan vs. Conventional Loan: What's the Difference?

The Jumbo loan limit in 2025 for most of the U.S is $806,500.

When it comes to financing a home, choosing the right type of mortgage is just as important as finding the right property. If you're shopping for a higher-priced home, you may find yourself comparing a jumbo loan vs. a conventional loan—but what exactly is the difference?

In this post, we’ll break down the key features of each loan type so you can decide which one fits your budget, qualifications, and financial goals in 2025.

What Is a Conventional Loan?

A conventional loan is any mortgage that isn’t backed by a government agency (like the FHA, VA, or USDA). The majority of conventional loans are conforming loans, which means they meet the loan limits and guidelines set by Fannie Mae and Freddie Mac.

2025 Conforming Loan Limit:

• $806,500 for most of the U.S.

• Higher limits apply in certain high-cost areas

  
  

If the loan amount is at or below this limit, it’s considered a conforming conventional loan.

What Is a Jumbo Loan?

A jumbo loan is a mortgage that exceeds the conforming loan limit. These loans are not eligible for purchase by Fannie Mae or Freddie Mac, which means lenders take on more risk—and impose stricter requirements.

Any loan amount over $806,500 (in most areas) is considered a jumbo loan in 2025.

Jumbo vs. Conventional Loans: Key Differences

Feature	Conventional Loan	Jumbo Loan
Loan Limit	Up to $806,500 (in most areas)	Above $806,500
Down Payment	As low as 3–5%	Typically 10–20% or more
Credit Score	Minimum 620	Usually 700+
DTI Ratio	Up to 50% in some cases	Often capped at 43%
Interest Rates	Competitive rates	Slightly higher (but varies)
Reserves Required	Few or none	Often 6–12 months of reserves
PMI	Required with <20% down	No PMI, but higher down payment

Choose a Conventional Loan if:

• Your loan amount is within conforming limits

• You have strong credit and want a low down payment

• You’re a first-time buyer or looking to refinance

  
  

Choose a Jumbo Loan if:

• You’re buying a luxury or high-value home

• Your loan amount exceeds conforming limits

• You have strong income, assets, and credit

Are Jumbo Loans Harder to Qualify For?

Yes. Because jumbo loans are considered non-conforming, lenders assume more risk and typically apply stricter guidelines. You’ll need a higher credit score, a larger down payment, and more cash reserves to qualify.

However, many lenders now offer competitive jumbo rates and flexible options—especially for high-income earners, business owners, and self-employed borrowers.

Final Thoughts

Both conventional and jumbo loans offer unique benefits depending on your home price, financial situation, and long-term goals. Understanding the difference between the two can help you plan ahead and avoid surprises during the mortgage process.

Whether you're buying your first home or upgrading to a larger property, it’s essential to get pre-approved and explore all your loan options. A knowledgeable mortgage advisor can help you compare rates, requirements, and programs to find the best fit.

How I Can Help You

When it comes time to purchase a home or refinance an existing loan, I want to help you! Hopefully articles like this give you good information and a better understanding of the mortgage world but let me use my experience and expertise to help you with your particular situation.

I tell my clients and referral partners that a mortgage transaction starts with a simple conversation. Let’s talk about your financial situation, budget, and goals so that I can help you determine the best solution for you. During a 10-minute informal conversation, we can get you on the right path as it relates to a home purchase or mortgage refinance.