Jumbo vs. conventional mortgage: What’s the difference?

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Figuring out the right mortgage needn’t involve a lot of mumbo jumbo.

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If you’re in the market for a home—and a mortgage—you may soon find yourself inundated with unfamiliar terms. The jargon doesn’t stop with the mechanics of a mortgage (interest, principal, escrow, and more). There’s also the question of whether you’re looking for a conventional mortgage or a jumbo loan. And what is a conforming loan limit, anyway?

If you’re already overwhelmed by the prospect of home buying, deciphering the lingo may seem like piling on. But it doesn’t have to feel that way if you take the time to learn about the types of mortgages and the rules that govern them.

Each year, the Federal Housing Finance Agency (FHFA) sets conforming loan limits for Fannie Mae and Freddie Mac, the two government-sponsored enterprises responsible for acquiring loans to keep the mortgage market liquid and functioning.

Any mortgage amount that exceeds the conforming limit is a jumbo mortgage. Any home loan that falls within the limits set by the FHFA, and isn’t part of a government-backed program, is a conventional mortgage.

You may find differences between jumbo loan interest rates and conventional rates, but some lenders try to keep costs competitive. There are often stricter requirements for jumbo loans, so you may need to fill out additional paperwork and provide a bigger down payment. And just as with conventional mortgages, if you don’t put at least 20% down toward the home’s purchase price, you may need to pay—and budget for—private mortgage insurance (PMI).

Also, if you get a jumbo loan, you likely aren’t eligible for some government-backed programs, including loans from the Federal Housing Administration (FHA) or U.S. Department of Agriculture (USDA), because they have their own loan limits.

The FHFA updates its conforming loan limits based on home prices. As the market changes, the loan limits rise to reflect the realities of higher sales prices (although the limits don’t drop when housing prices tumble, as they did in the financial crisis of 2007–08). The FHFA also recognizes that some regions of the country have higher home prices than others. As a result, the conforming loan limit in costlier areas is higher. The conforming loan limits for 2026 are:

Loan limits are determined by county, but most U.S. counties fall within the regular category. Check the FHFA website for more information and the limits on conforming loans in your area. For most home buyers, a jumbo loan is any amount above $832,750.

If you’re looking to buy a house in a more expensive area, such as some counties in California or Alaska, Guam, Hawaii, and the U.S. Virgin Islands, you can get a mortgage of up to $1,249,125 and still take advantage of government-sponsored programs. Such loans are considered conventional and eligible for programs offered by Fannie Mae and Freddie Mac.

In many cases, jumbo and conventional loans must meet the requirements set out by the Consumer Financial Protection Bureau (CFPB) to be considered “qualified.” The assumption with a qualified mortgage is that the lender made a good-faith effort to verify your ability to repay the loan.

When qualifying for a jumbo loan, you’ll likely need to meet stricter criteria than for a conventional loan:

The verification process and paperwork for a jumbo loan are usually more stringent. You may have more hoops to jump through if you decide to apply for a jumbo mortgage.

Whether you get a jumbo loan or a conventional mortgage depends on where you live and your financial goals.

Conventional loans make sense for the typical homebuyer. Because they meet conforming loan limits, they can be bought by Fannie Mae and Freddie Mac. When mortgage companies know they can sell the loan, they have more flexibility and are willing to take on a little more risk—they may be less stringent about credit scores and DTI when originating a loan.

If the house of your dreams meets your income and budget requirements but costs more than $832,750 and isn’t in a designated high-cost area, you’ll need a jumbo loan.

Finding a mortgage to meet your home-buying needs may seem challenging, but the good news is that there’s lots of competition out there seeking your business. Set a budget and research how much your ideal house is likely to cost to help you determine what type of loan you need.

Unless you live in an expensive area or are looking to buy a home outside conforming loan limits, chances are a conventional mortgage is your best bet. Jumbo loans may help you buy more house, but they come with additional requirements, including a higher credit score.