The Best Jumbo Loan Mortgages

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A jumbo loan is also known as a non-conforming conventional mortgage. This type of mortgage is used to finance homes at a very high price point that are too expensive to be guaranteed by Fannie Mae and Freddie Mac. Without that financial backing, the lender is on the hook for any losses if you default on the loan. The added risk means you need to come up with a full 20% down payment on the mortgage, and the jumbo mortgage interest rates may be higher than a conventional loan. To get the best deal, you need to shop around for competitive APRs and examine your loan estimate after application to assess closing costs with each lender.

The 6 best jumbo loan mortgages of 2020


Loan Types Offered APR
Wells Fargo 30-year fixed
15-year fixed
7/1 ARM
10/1 ARM
Bank of America 30-year fixed
15-year fixed
5/1 ARM
U.S. Bank 30-year fixed
20-year fixed
15-year fixed
Ally 30-year fixed
15-year fixed
5/1 ARM
USAA 30-year fixed
30-year VA
5/1 AR jumbo loan VA
Citizens 30-year fixed
15-year fixed
7/1 ARM

The 6 best jumbo loan mortgages of 2020

Wells Fargo — Best 15-year rates

For consumers who want to tackle a jumbo mortgage in a competitive manner, a 15-year fixed-rate mortgage provides access to a set interest rate with the ability to start paying down the principal in fewer years. This lets you build your home equity quickly, should you ever need access to additional cash. Equity also helps when you want to refinance the property at a lower rate in the future without taking several steps back financially. Multiple jumbo loan types are offered by Wells Fargo, including variable-rate options. However, the lowest interest is on a 15-year fixed, which is at 3.% APR as of December 2019.

Bank of America — Best 30-year rates

Home loans that exceed $484,350 are past the Fannie Mae and Freddie Mac limits for most counties in the U.S. as of December 2019, making them jumbo-loan-ready. For some buyers, a jumbo loan may not mean an investment in premium real estate. The purchase price could cover a fairly standard house in a good neighborhood in an area where real estate prices are at a premium. In these instances, homeowners may prefer a 30-year fixed to budget out the monthly payments for the family home. At Bank of America, a 30-year fixed mortgage carries an APR of 3.495% as of December 2019, making it one of the best options for a long-term loan.

U.S. Bank — Best 20-year option

For buyers stuck between the desire to quickly establish home equity and a lack of cash flow to tackle the payments on a 15-year mortgage, the 20-year option provides an opportunity to get ahead without stretching yourself too thin. At U.S. Bank, the 20-year fixed jumbo loan currently carries a 3.905% APR. This loan requires a more robust repayment option than a 30-year mortgage, but it provides a bit of breathing room if you have just started to earn a higher paycheck and have not established a robust savings cushion yet. The decreased term will allow you to save on interest while maintaining contributions to savings, retirement and college accounts — and maybe have a bit of fun sprucing up the new home, too.

Ally — Best web-bank option

Ally is a web-based bank that provides competitive rates on both savings options and loans. All three of its jumbo loan types are solid entries in the 30- and 15-year fixed rate categories and the 5/1 adjustable rate category. A 5/1 adjustable rate loan means that the interest rate for the first five years is fixed at the initial rate and converts to an adjustable rate after the five years, which can change annually for the remainder of the loan. An added perk of Ally jumbo home loans is the possibility for buyers with a credit score of 720 or above to qualify for a reduced down payment. The most qualified buyers may be able to reduce the down payment as low as 10%. If your credit score is exemplary and you want to keep more ready cash, Ally may be your best bet.

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USAA — Best VA-ready option

Veterans Administration-guaranteed loans for conventional mortgages do not require a down payment. When you’re attempting to use a VA loan guarantee for a jumbo loan, no down payment is required up to the amount of your entitlement from the VA. After that threshold is reached, you must pay 25% down on the remaining balance. At USAA, two VA-loan ready options are offered: a 30-year fixed and a 5/1 adjustable rate. Beyond locking in a lower fixed rate on the 30-year loan — 3.624% compared to 3.888% — it also provides the option to finance your VA funding fee. On a jumbo loan, the 2.15% funding fee can be substantial and a further hit to your cash reserves, making this service an option if you need to maintain ready capital.

Citizens Bank — Best adjustable options

Citizens Bank offers a wide range of adjustable-rate mortgages in the jumbo-loan tier. ARM mortgage options range from three years of fixed rates to 10 years at the steady rate before annual adjustments kick in on a 30-year mortgage. When interest rates are already low, opting for a locked-in lower rate as long as possible will help you minimize interest expenses for longer. If rates are high, selecting a lower period of fixed-rate interest at the beginning could help you obtain lower rates in the future.

What is a jumbo home loan?

A jumbo home loan provides buyers with a mortgage option when they’re purchasing a home with a price tag over the $484,350 limit set by Fannie Mae and Freddie Mac. Unlike a conventional mortgage, jumbo loans are more stringent in their requirements for a 20% down payment and adherence to preferred credit score and debt-to-income ratios. Interest rates may sometimes be higher but are often competitive with conventional loans. It should be noted that while the $484,350 limit applies in most U.S. counties, in certain high-cost areas and Alaska and Hawaii, it can be as high as $726,525.

How should I choose the right jumbo home loan?

The right jumbo home loan varies based on your financial situation. If your need for a jumbo loan is based on where you live versus the type of home you are buying, you may prefer the improved cash flow that comes with a 30-year loan. Buyers with ample savings, however, could opt for a 15-year fixed rate to pay off the home faster and spend less on interest. Other buyers may find the lower initial interest and costs of a variable rate jumbo loan appealing, while cost-conscious consumers prefer the reliability of a fixed-rate option.

The bottom line

When you need to obtain a jumbo home loan, always shop around to find the best rates possible within the loan types you prefer, and start researching loan options before you find the perfect house. This will help you better understand what you can afford when you begin your search for a home. As you shop, keep stashing your cash to cover closing costs and ensure that you have the 20% needed for a full down payment.

If you have money left over in the home fund, consider buying a mortgage point, or discount point, to lower your APR at closing. A discount point costs 1% of your mortgage amount, such as $2,500 on a $250,000 mortgage, but can provide major savings through reduced interest payments. Each mortgage lender sets its own rate reduction per point purchased, such as 0.25%.