Jumbo Loans
WHEN THE LOAN IS LARGER THAN THE LIMIT
A jumbo loan is simply a mortgage too large for Fannie Mae or Freddie Mac to buy. For 2026 that line sits at $832,750 across Kerr, Bexar and most Texas counties — and a good many ordinary Hill Country properties now cross it.
Start Here
Where Conventional Ends and Jumbo Begins
Each year the Federal Housing Finance Agency sets the conforming loan limit — the largest mortgage Fannie Mae and Freddie Mac are permitted to buy. For 2026 the baseline is $832,750 on a one-unit property, and that figure applies across most Texas counties, Kerr and Bexar included. A loan above it can’t be sold to either one, so the lender keeps it on its own books or sells it to private investors instead.
That is the entire definition. It says nothing about the house, the neighborhood, or the borrower — only about the size of the loan.
And it is the loan amount that counts, not the purchase price. A $900,000 home with 20% down is a $720,000 loan, comfortably conforming. The same house with 10% down is an $810,000 loan, still under. Push the borrowing higher and it becomes jumbo. Your down payment decides which side of the line you land on, which is worth knowing before you write an offer rather than after.
Because no agency stands behind a jumbo loan, each lender writes its own rules for one. Credit, down payment, reserves and documentation vary far more from lender to lender here than they do on conventional financing — which is precisely why it pays to have someone putting the file in front of several of them.
Clearing the Ground
Four Things People Get Wrong About Jumbo Loans
More misconceptions attach to this program than to any other, and most of them talk people out of a loan they could have had.
“It’s only for mansions.”
The limit is a dollar figure, not a description of a house. A place on fifteen acres outside Kerrville, an older home in Alamo Heights, a stretch of Guadalupe river frontage — properties cross the line here without anyone involved thinking of them as luxury. In a market where land carries much of the value, the label fits poorly.
If the loan is above the limit, it’s a jumbo loan. That’s the whole test.
“You need twenty percent down.”
Twenty percent is common and it is often the cleanest path, but it is not a rule. Down payments in the 10–20% range are widely available, and a strong file can sometimes do better than that. Larger loan amounts generally ask for more down, as do second homes and investment properties.
More down usually improves your pricing and widens the field of lenders willing to write the loan.
“The rate will be far higher.”
Jumbo loans are priced by each lender against its own appetite for the risk, not against an agency guarantee. The gap against conforming pricing therefore moves with the market and with the strength of the file — it has been wide at times and very narrow at others. What is consistently true is that the spread between one lender and the next is wider on jumbo than on almost anything else.
Which is an argument for shopping the loan, not for assuming the answer.
“First-time buyers need not apply.”
No rule bars a first-time buyer from a jumbo loan. The file is judged the same way anyone else’s is — credit, down payment, reserves, documented income. Someone buying a first home at this price point usually has the income and assets to support it.
Buying your first home and borrowing above the limit are two unrelated facts.
Qualifying
What Jumbo Underwriting Asks For
These are general starting points rather than cutoffs, and they move more between lenders than the figures on any other program. Strength in one area frequently offsets a shortfall in another — the judgment a conversation adds, and a webpage can’t.
Credit
700 is the usual starting point, though some lenders will look at a file in the high 600s where the rest of it is strong. Above roughly 740 the pricing generally improves and more down-payment options open up. Because there is no agency scorecard behind the decision, the threshold genuinely differs from one lender to the next.
Down payment
Commonly 10–20% on a primary residence. The requirement tends to step up as the loan amount grows, and again on second homes and investment property. A larger down payment can also be the thing that moves a borderline file into approval territory.
Cash reserves
The requirement that catches most people by surprise. Lenders generally want to see six to twelve months of the full payment — principal, interest, taxes and insurance — still available after closing. Retirement and investment accounts usually count toward it, often at a discount to their face value rather than dollar for dollar.
Debt-to-income
Monthly obligations measured against gross monthly income, commonly capped somewhere around 43–45%. Some programs allow more room where credit and reserves are strong, and a few private-bank style programs go further still for borrowers with substantial liquid assets.
Documentation
Expect a deeper file than a conforming loan asks for: two years of tax returns, W-2s or K-1s, and current statements on every account being used for the down payment or counted as reserves. Two situations have their own routes — self-employed borrowers whose returns understate what the business actually produces, and asset-rich retirees whose documented income looks modest next to their balance sheet.
Cost
How a Jumbo Loan Is Priced
Two questions come up on nearly every jumbo file, and neither has a single national answer.
Mortgage insurance
Many jumbo programs carry no monthly mortgage insurance at all, even below 20% down — the lender prices that risk into the interest rate instead. Others handle it the conventional way and add a premium.
The difference matters more than it first appears. Conventional PMI is temporary: it can be cancelled at 80% of original value and terminates automatically at 78%. Where a jumbo lender has built the cost into the rate, there is nothing to cancel later — it stays until the loan is refinanced or paid off.
Worth asking which structure a quote is using before comparing it to anything else.
One loan, or two
Sometimes a conforming first mortgage paired with a second lien costs less than a single jumbo loan covering the same amount. Sometimes it doesn’t. It turns on how the two are priced that week and on how the second lien is structured, which in Texas carries rules of its own.
It is not a trick and it is not always the answer — it is simply a second way to arrange the same purchase, and the only way to know which is cheaper is to price both.
Fixed and adjustable both exist on jumbo terms; how to choose between them is covered on the conventional loan page.
Timeline
The Appraisal Deserves Early Attention
On a conforming purchase the appraisal is usually a formality. On a large or unusual property it is the step most likely to shape the timeline — and in this part of Texas, unusual is ordinary.
Reading the plat early tells you where the boundaries actually run, where the easements and the road frontage sit, and how much of what you are buying is land. All three shape the appraisal.
- Comparable sales get thin at the top of the market. An appraiser needs recent sales of genuinely similar properties. In Kerr County and the surrounding Hill Country there may be very few for a home on acreage, and the ones that exist may be some distance away or several months old.
- Land can carry much of the value. On a property where the acreage is worth as much as the house, the appraisal has to account for both, and lenders differ on how much land they will lend against.
- Outbuildings, wells, septic systems and shared water arrangements all need raising early. They affect the appraisal and sometimes the choice of lender. Raise them before you’re under contract, not when underwriting asks.
- A second appraisal is still possible above certain loan amounts. Less common than it once was, but some lenders require one on larger loans — which affects both the cost and the calendar.
- Build in more time than a conforming purchase would need. A jumbo file has more documents, more review, and an appraisal that can take longer to complete. An option period written for a routine purchase can be uncomfortably short.
Local Detail
What Jumbo Borrowers in Texas Should Plan For
The program rules are national. How they land at these price points here is not.
- Escrow becomes a very large number. Texas has no state income tax and property tax rates are correspondingly higher than in much of the country. On a home well above the conforming limit, the monthly taxes and insurance can approach what people expect the whole payment to be. Budget from the full figure, not from principal and interest.
- File your homestead exemption. On a primary residence it reduces the taxable value and caps how quickly the assessment can climb. It is free, it is not automatic, and at these valuations the annual saving is not small.
- Get insurance quotes during the option period. Replacement cost rises with the house, and a rural property raises questions about distance to a fire department and to a hydrant that suburban buyers never encounter. Insurance surprises after the option period has run are expensive ones.
- Texas cash-out rules apply regardless of loan size. A cash-out refinance on a homestead is limited to 80% of the value, requires a twelve-day waiting period before closing, and is available once every twelve months. Jumbo loans are not exempt from any of it. If tapping equity later is part of the plan, that ceiling is worth knowing now.
- Second homes and investment property are on the table. River places, weekend houses and rentals are all financeable on jumbo terms — with more down, more reserves, and a closer look at the rest of the file.
If This Isn’t Quite Your Situation
Other Programs Worth a Look
Conventional Loans
If a larger down payment brings the loan under the limit, conventional financing is usually the simpler road — and the mortgage insurance ends.
Learn More →Bank Statement Loans
For self-employed borrowers whose tax returns understate what the business actually earns — including at jumbo loan amounts.
Learn More →All Loan Options
Conventional, FHA, VA, USDA, bank statement and reverse mortgage — the full set of programs side by side.
See the Overview →Jumbo Loan Questions
What is the jumbo loan limit in Texas for 2026?
Does the limit apply to the price of the house or the loan?
What credit score do you need for a jumbo loan?
How much do I need to put down?
Do jumbo loans require mortgage insurance?
What are cash reserves, and how much do I need?
Are jumbo rates higher than conventional rates?
Can I do a cash-out refinance with a jumbo loan in Texas?
Chet’s full Mortgage FAQs page covers credit, closing costs, appraisals and what to expect at every step.
See Where You Stand
No cost, no obligation, and no pressure — just a clear answer on what a loan this size would take.
