How To Avoid Jumbo Loan

Avoiding a jumbo loan means steering clear of borrowing amounts that exceed the conforming loan limits set by government-backed entities like Fannie Mae and Freddie Mac. Jumbo loans typically come with higher interest rates, stricter requirements, and bigger down payments.

Here’s how to avoid getting a jumbo loan:

How To Avoid a Jumbo Loan

1. Know Your Local Conforming Loan Limits

Each area has a maximum conforming loan limit (usually $726,200 for most US counties in 2024, but higher in expensive areas).
Stay within this limit to qualify for conventional loans with better terms.

2. Buy a Less Expensive Property

Consider homes priced below the jumbo loan threshold.
Adjust your expectations or look for properties in more affordable neighborhoods.

3. Increase Your Down Payment

Put down a larger amount to reduce the loan size.
For example, if the home price is high, a bigger down payment can keep the mortgage under the jumbo loan limit.

4. Consider a Piggyback Loan

Use a second mortgage (like an 80/10/10 loan) to avoid a single jumbo loan.
The first mortgage stays within conforming limits, and the second covers the remainder.

5. Shop for Special Loan Programs

Some lenders offer jumbo-friendly loans with better rates or programs.
Or look for government-backed loans (FHA, VA) with limits you can meet.

6. Work With a Mortgage Broker

They can help find lenders or programs suited to your financial situation that avoid jumbo loans.

Why Avoid Jumbo Loans?

Reason	Explanation
Higher Interest Rates	Jumbo loans usually have higher rates than conforming loans.
Stricter Qualification	More stringent credit score and income requirements.
Larger Down Payment	Often 20% or more down required.
Less Flexible Terms	Less options for refinancing or loan modifications.