A jumbo loan is any mortgage larger than the conforming loan limit set for your county by the Federal Housing Finance Agency, and a non-QM loan is one that doesn’t meet the CFPB’s Qualified Mortgage standards. Usually because the borrower’s income is documented a different way. Neither is a subprime loan: non-QM lenders are still required to verify your ability to repay under federal rules.

Expect a jumbo file to need roughly a 700 – 720 credit score, 10% – 20% down, and 6 – 12 months of reserves, while bank statement and portfolio programs trade a slightly higher rate for flexibility on how income is proven. Learn more about jumbo and non-QM loans, including qualification requirements, the structures available, and what each one costs.

Key takeaways:

• Jumbo means one thing only: A loan larger than your county’s conforming limit, $832,750 for a one-unit home in most of the country in 2026. Your credit and income don’t make a loan jumbo; only the amount does.
• Jumbo qualification is stricter, not stranger: Plan on a 700 – 720 credit score, 10% – 20% down, a debt-to-income ratio most jumbo lenders hold near 43%, and 6 – 12 months of reserves after closing.
• Non-QM is about documentation, not risk tolerance: Bank statement, portfolio and asset-depletion programs verify income differently for self-employed and complex-income borrowers, and every one still has to satisfy the federal ability-to-repay rule.

What is a jumbo loan?

A jumbo loan is a mortgage larger than the conforming loan limit for the county where you’re buying, $832,750 for a one-unit home in most of the United States in 2026. Above that line Fannie Mae and Freddie Mac can’t buy the loan, so the lender’s own investors set both the price and the guidelines. It’s the far end of the menu of mortgage loan types. Loan size is the only entry ticket.

The Federal Housing Finance Agency resets that limit every November, tracking average U.S. home prices. Counties with high enough local values get an elevated limit, topping out at a 2026 ceiling of $1,249,125. One dollar over your county’s number moves the file into jumbo pricing, there’s no partial credit.

So a near miss is worth doing math on. On a $900,000 purchase, 5% down leaves an $855,000 loan, jumbo. Going to 7.5% down brings it to $832,500, back under the limit and often into cheaper pricing.¹ A piggyback second does the same job. Sometimes the answer runs the other way, though: your cash is worth more in reserves.

Jumbo vs. non-conforming: are they the same thing?

No. Jumbo is one kind of non-conforming loan, not the whole category. Non-conforming covers any loan Fannie or Freddie won’t buy, size, income documentation, property type or credit history, and our guide to non-conforming loans maps the full bucket. If size is your only issue, a jumbo behaves like the conventional loans you know, with more reserves.

Jumbo loan requirements: Credit, down payment, DTI, and reserves

Most jumbo approvals come together around a 700 – 720 credit score, 10% – 20% down, and 6 – 12 months of reserves after closing. Those are lender guidelines, not agency rules, nobody publishes a national jumbo rulebook, so they shift by investor.

• Credit score: 700 – 720 is the common entry point across Align’s network, with the best pricing tiers starting above 760.
• Down payment: 10% – 20% covers most of the market. Five-percent-down programs exist at fewer lenders and ask for a higher score, more reserves or both.
• Debt-to-income ratio: Most jumbo investors hold DTI near 43%, and some stretch into the mid-40s with compensating factors. Worth knowing: that 43% is a lender guideline, not a federal rule, the CFPB removed the General QM debt-to-income limit and replaced it with a price-based test. Guidelines bend in a way rules don’t.
• Reserves: 6 – 12 months of the full housing payment, principal, interest, taxes, insurance and HOA dues, left after closing. Larger loans push that higher, and retirement accounts usually count at a discount.
• Appraisal: A second full appraisal is routine above certain loan sizes, and both reports must support the value. Budget the extra week.

Here’s what matters most. Because jumbo loans are priced investor by investor, the gap between the best and worst quote on an identical borrower runs wider on Align’s jumbo files than on our conforming ones. Align is a broker, not a lender, so we can place a jumbo or non-QM file with whichever wholesale investor’s guidelines actually fit it instead of forcing it into one bank’s single program. Our breakdown of how to qualify for a jumbo loan covers what underwriters verify, and our jumbo loan tips cover how to present a file cleanly.

What is a non-QM loan, and who is it for?

A non-QM loan is a mortgage that falls outside the CFPB’s Qualified Mortgage definition. Usually because income is documented with bank statements, assets or property cash flow instead of tax returns. QM status is a legal safe harbor for the lender, not a quality rating for the borrower.

Here’s the distinction that matters. Stepping outside QM does not switch off the federal ability-to-repay rule: under Regulation Z, a lender must make a reasonable, good-faith determination that you can repay the loan. The lender still documents income, verifies assets and runs a ratio, it just gets there down a different road.

• Self-employed borrowers: Legitimate write-offs shrink the net income on your returns, and that net figure is all agency underwriting sees. Start with mortgage options for self-employed borrowers before assuming you need non-QM.
• Recent business owners: Strong revenue with less than a two-year history rarely clears conventional guidelines but can clear a bank statement program.
• Real estate investors: Programs that qualify the property on its rental cash flow instead of qualifying you on personal income.
• Retirees with assets: Big savings and modest reported income is the classic asset-depletion case, where a verified balance becomes qualifying monthly income.
• Borrowers past a credit event: Some programs accept shorter seasoning after a bankruptcy or foreclosure than conventional financing allows.

One caveat, because it costs us business to say it: non-QM is frequently the wrong answer. Past a credit event, the government-backed menu often prices better, check FHA loans first, and if you’ve served, check VA loans before anything else.

Types of jumbo and non-QM structures

Five structures cover nearly everything here.

Portfolio loans

How it works: The lender keeps the loan on its own books, so it writes its own guidelines. What it typically requires: Whatever that lender decides, often 10% – 25% down. Who it’s best for: Files no published guideline fits, including non-warrantable condos. A portfolio loan is where custom underwriting lives.

Bank statement loans

How it works: The lender averages 12 or 24 months of deposits and applies an expense factor, commonly 50% on business accounts, to reach qualifying income. What it typically requires: Two years of self-employment, 10% – 20% down, a mid-600s score. Who it’s best for: Owners whose deposits beat their returns. See non-QM loans for self-employed borrowers.

Interest-only mortgages

How it works: You pay only interest for 7 – 10 years, then the loan recasts and amortizes over the years that remain. What it typically requires: Strong credit, a larger down payment, real reserves. Who it’s best for: Bonus-heavy income with a defined exit. Read our guide to interest-only mortgages and the pros and cons of interest-only mortgages.

Balloon mortgages

How it works: Payments are set on a long amortization, but the whole balance comes due at the end of a short term, often 5 – 7 years. What it typically requires: Meaningful equity and a credible exit plan. Who it’s best for: Short holds and bridge situations. Learn how balloon mortgages are structured and what balloon payments demand at maturity.

No-doc and low-doc programs

How it works: Qualification leans on assets, property cash flow or a thin slice of documentation. What it typically requires: The largest down payments here, 20% – 30%. Who it’s best for: Borrowers who genuinely can’t produce conventional documentation, our explainer on no-doc mortgages covers what the label means today.

Structure	Typical minimum score	Typical down payment	What it solves	Main risk
Full-doc jumbo	700 – 720	10% – 20%	Loan above the county limit	Reserves and appraisals stall files
Portfolio	Set by the lender	10% – 25%	Files no guideline fits	Terms are lender-specific
Bank statement	660 – 700	10% – 20%	Income buried under write-offs	Expense factor sets your loan amount
Interest-only	700+	20% – 30%	Lower payment early on	Payment jumps at recast
Balloon	Varies by lender	20% – 30%	Short-term financing	Full balance due at maturity
No-doc / low-doc	680 – 720	20% – 30%	Documentation you can’t produce	The largest rate premium here

The risks worth understanding before you sign

Every structure above buys flexibility with a tradeoff, and most of those tradeoffs land years after closing.

• Payment shock at recast: When an interest-only period ends, the loan amortizes over the years that are left, not a fresh 30. A 10-year interest-only period on a 30-year loan repays principal across 20 years, so the jump is bigger than most borrowers picture. Weigh the risks and benefits of interest-only mortgages against the payment you’d hold, not the one you start with.
• Refinance dependency: A balloon works only if you can sell or refinance before maturity. If values soften or guidelines tighten, that exit may not be there, read the risks and benefits of balloon mortgages first.
• Prepayment penalties: On an owner-occupied mortgage, federal rules are largely on your side, a prepayment penalty is generally permitted only on a qualified mortgage with a fixed or step rate that isn’t higher-priced, it can’t apply after the first three years, and the lender must offer an alternative loan without one. These penalties do show up on business-purpose investor loans, which sit outside those protections. Ask which side of that line your loan falls on.
• Rate premium: Expect to pay more than a comparable conforming loan, a fraction of a percentage point on a clean full-doc jumbo, and meaningfully more as documentation gets lighter. The premium moves with the investor, so re-quote rather than assume last quarter’s spread holds.

What Michigan buyers should know

Michigan sits entirely at the baseline conforming limit, so the jumbo threshold here is lower than in the coastal metros most jumbo advice targets.

• County limits: All 83 Michigan counties carry the 2026 baseline one-unit conforming limit of $832,750. Michigan has no designated high-cost counties. The limit is the same in Oakland County as in Gogebic.
• Two-unit properties get more room: The 2026 baseline two-unit limit is $1,066,250, so a duplex can carry a much larger conforming loan than a single-family home at the same price.
• Where Michigan jumbo files come from: Birmingham, Bloomfield Hills, Ann Arbor and Grosse Pointe, plus inland-lake and Lake Michigan waterfront, where comparable sales are thin and seasonal, so appraisals take longer.
• A self-employed state: Michigan’s contractor, trades and small-manufacturing base produces a high share of write-off-heavy tax returns, which is why bank statement programs move real volume here.

FAQ: Jumbo and non-QM loans

Here are answers to common questions about jumbo and non-QM loans.

Are jumbo rates always higher than conforming rates?

No, not always. Jumbo loans are priced by individual investors rather than by Fannie Mae and Freddie Mac, so the spread moves independently, and for well-qualified borrowers with large down payments, jumbo pricing has at times landed at or below conforming. What is consistently true is that jumbo pricing varies far more from lender to lender than conforming pricing does, which makes shopping the same file across several lenders worth more here than almost anywhere else, our jumbo loan tips cover how to run that comparison on the same day.

Can I get a jumbo loan with 10% down?

Yes, and sometimes with less. Ten-percent-down jumbo programs are widely available for borrowers with strong credit and solid reserves, and a smaller set of lenders will go to 5% down at higher scores or with a piggyback second mortgage behind the first. The trade-off is usually a rate adjustment, tighter reserve requirements, or both. The programs are lender-specific, so the answer depends heavily on which lenders your file is shopped to, start with how to qualify for a jumbo loan to see what those lenders verify.

Is a non-QM loan the same as a subprime loan?

No. Subprime lending before 2008 often involved no verification of income or ability to repay. Non-QM loans sit outside the CFPB’s Qualified Mortgage safe harbor, but the federal ability-to-repay rule still applies in full. The lender must document that you can afford the payment, just through bank statements, assets, or property cash flow instead of tax returns. Most non-QM borrowers today have strong credit and substantial equity, our guide to non-conforming loans maps where non-QM sits in the wider category.

How many months of bank statements does a bank statement loan require?

Typically 12 or 24 months of personal or business bank statements. The lender averages your deposits and applies an expense factor, often 50% for business accounts, though some programs accept a CPA letter documenting a lower figure, to arrive at qualifying income. Twenty-four-month programs generally price better than 12-month programs. Because the expense factor drives your approved loan amount, comparing programs matters as much as comparing rates, see non-QM loans for self-employed borrowers for the document list.

The bottom line on jumbo and non-QM loans

A jumbo loan is a loan above your county’s conforming limit, $832,750 for a one-unit home across all of Michigan and most of the country in 2026, and it typically asks for a 700 – 720 credit score, 10% – 20% down and 6 – 12 months of reserves. Non-QM is a different way to document income, not a lower standard of repayment. Because both are priced investor by investor, the same file draws very different answers.

If you’re ready to compare jumbo or non-QM pricing, talk to Align Lending, we’ll shop your scenario across our lender network and show you the numbers side by side. Call 248-506-5727 or start online today.

Footnotes:

1. Example figures are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Your rate and terms will depend on your application and market conditions. Return to text

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Consult a qualified professional about your situation. Figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to lender overlays and change. Conforming loan limits are set annually by the Federal Housing Finance Agency and are current for 2026. Align Lending works with FHA- and VA-approved lenders and is not acting on behalf of, endorsed by, or sponsored by FHA, HUD, or the Department of Veterans Affairs.