Compare the Best Jumbo Mortgage Rates for 2024

Home loans come with a mortgage rate, which is the amount of interest borrowers are charged in exchange for the amount lent by the financing company. Rates can be fixed or adjustable. Fixed rates won’t change throughout the mortgage term, while adjustable-rate mortgages fluctuate based on a benchmark rate for the duration of the mortgage term—usually every six months or a year.

The mortgage rate is one of the most important features for borrowers looking into home financing options. That’s because this rate will affect the monthly payments and total interest paid over the course of the loan. 

A jumbo mortgage, or jumbo loan, is a type of loan that exceeds value limits set by the Federal Housing Finance Agency (FHFA). These types of mortgages aren’t guaranteed, purchased, or sold by Fannie Mae or Freddie Mac, both government-sponsored entities. 

These limits vary based on where you live. In general, areas with a higher cost of living will have higher limits. As of 2024, FHFA set the conforming loan limit at $766,550 (single-family homes) for most U.S. counties. There is an exception where there are higher home values, and the limit is increased to $1,149,825. Anything above these numbers is a jumbo mortgage.

Like conventional mortgages, rates are influenced based on the Federal Reserve benchmarks and on individual factors such as the borrower’s credit score. Jumbo mortgage rates will rise and fall in line with the Fed’s short-term interest rates.

Additionally, since these loans are more than half a million dollars and pose a great risk to lenders, borrowers will face more rigorous credit requirements. This includes having a much higher credit score (often at least 700) and a lower debt-to-income ratio. Lenders will also want borrowers to prove they have certain cash reserves. The better your credit profile, the lower your jumbo mortgage rate.

The Federal Reserve doesn’t determine mortgage rates directly. Instead, it influences the rate indirectly by deciding on short-term interest rates. These rates are ones that financial institutions use to borrow from each other and which the government issues short-term bonds. 

Ultimately, the Federal Reserve uses these rates to help guide the economy by encouraging growth and controlling inflation. Lowering rates is often a sign of trying to stimulate the economy with new big-ticket purchases such as homes.

Whenever the Federal Open Market Committee decides to raise or lower short-term interest rates, lenders raise or lower theirs accordingly.

What’s considered a good jumbo mortgage rate will depend on your individual credit profile. Just because you see low advertised rates doesn’t mean you’ll get that rate. The best rates are offered to those with excellent credit, a sizable amount of assets, and a low debt-to-income ratio, among other factors. 

Various mortgage types offer different rates. Conventional, fixed-rate mortgages usually have different rates between loan terms; longer terms hold higher interest rates than shorter terms. For instance, a 15-year mortgage usually has lower rates than a 30-year term.

Adjustable-rate mortgages, or ARMs, have different rates from fixed-rate mortgages. ARM loans usually have lower initial interest rates, making payments more manageable early in the loan term. After a predetermined period of time, the rate goes up or down depending on the current market conditions. For example, a 5/1 arm has an initial fixed period of five years followed by an adjustable rate that resets every year. A 7/1 arm would instead have a seven-year fixed period, while a 3/2 ARM would see rates adjust every two years following an initial 3-year period of fixed rates.

Jumbo mortgages also have different rates than conforming mortgages, usually higher than conforming mortgages because of the risk associated with a larger loan balance.

Borrowers may notice some lenders offer interest rates and annual percentage rates (APR) that are similar, but they are in fact two different things. The interest rate, expressed as a percentage, is the amount a lender intends to charge borrowers for the amount lent (known as the principal). The APR, also expressed as a percentage, includes the interest rate plus all lender charges rolled into the loan, such as application fees, broker fees, origination fees, and any mortgage points. 

APRs tend to be higher than their corresponding interest rates. When they are similar, it means the mortgage has fewer added costs rolled into the loan. The lower the APR, the fewer borrowers pay for the loan over the course of the contract term.

Due to the more stringent requirements in qualifying for a jumbo mortgage, borrowers need to have a high credit score, a low debt-to-income (DTI) ratio, and plenty of assets or cash reserves. In other words, lenders want borrowers to prove they’re financially stable and creditworthy enough to take out a jumbo loan since they can’t sell their loans to Fannie Mae or Freddie Mac to offload some risks. 

Many lenders want to see scores of 700 or more to offer competitive rates. To raise yours, first, see where you stand. You can get a free credit report from all three major credit bureaus—Equifax, Experian, and TransUnion—from AnnualCreditReport.com. Make sure all the information on your reports is accurate. Otherwise, contact the credit reporting bureau and the appropriate creditor of any discrepancies to contest it. 

There are plenty of ways to raise or maintain your credit score, but the most effective way is to ensure you’re paying down your debt and making on-time payments. Other actions include not taking out any additional loans or debts when applying for a mortgage.

As for your DTI, this ratio is a percentage of your gross income that goes toward paying your monthly debt obligations. Lenders look at this number to determine whether you can afford your mortgage payments. Lenders want borrowers to have a DTI of no more than 43% but ideally seek DTI ratios of 36% or less.

Lenders also look at a front-end DTI, which calculates how much of your gross income goes toward housing. To calculate the front end, divide all your housing expenses (including mortgage payments and homeowners insurance) by your gross income. Lenders prefer that this number is no more than 28% of your total income.

If your DTI is high, you can lower that amount by increasing your income or paying down more of your existing debt.

Other ways to help you qualify for better jumbo mortgage rates include having more cash reserves. Larger amounts of assets show lenders that, if need be, you can draw from these reserves to pay your monthly mortgage payments. Mortgage lenders may not require a huge down payment (some may ask for 10% down), but to avoid the cost of private mortgage insurance and increase your chances of getting a better rate, aiming for 20% down is a good idea. 

How much you can borrow will depend on factors such as your credit score, income, assets, and property value. Jumbo mortgages are generally the best for someone who is a high-income earner—essentially, someone who can afford the higher payments.

Even if lenders offer a specific loan amount, it doesn’t mean you need to purchase a home up to that limit. Carefully consider how much you want to pay and can easily afford so that you can achieve your other financial goals, like saving for retirement. A good rule of thumb is to use the front-end DTI to determine your maximum affordability, which shouldn’t exceed 28% of your income.

Also referred to as discount points, mortgage points are a fee borrowers pay lenders in order to receive a lower interest rate. In other words, you are prepaying interest for a period of time in order to pay less on the overall lifetime costs of your loan.

One mortgage point costs 1% of your loan amount. For instance, if you take out a loan for $600,000, you’ll pay $6,000 to reduce your rate by 0.25%. It may not seem like a huge amount, but it can add up to tens of thousands of dollars in interest over the life of the loan. 

For example, you take out a $600,000 mortgage with 20% down and at an interest rate of 3.25%. With a 30-year jumbo loan, you’ll pay $272,036.52 in interest. In contrast, if you paid $6,000 to lower the rate to 3%, you’ll end up paying $248,531.77 in interest, a savings of $23,504.75.

The decision to take out a jumbo mortgage is a decision not to be taken lightly. That’s why it’s important to understand what lenders are looking for when it comes to these types of mortgages as well as making sure that you can afford the monthly payments. With homes that have a higher value, home insurance and maintenance needs may also be more expensive, so don’t forget to factor these costs into your budget. 

If you do decide to move forward, you’ll probably face a more complicated and involved process in order for a lender to approve a loan. That’s why shopping around is crucial—finding the right lender offers you the best chance of purchasing your dream home.