A Guide to Refinancing a Jumbo Loan
A jumbo refinance is any refinance where the new loan amount lands above the conforming loan limit, which the Federal Housing Finance Agency set at $832,750 for a one-unit property in most U.S. counties for 2026, with a ceiling of $1,249,125 in designated high-cost areas. Every one of Michigan’s 83 counties uses the $832,750 baseline, so a Michigan homeowner crosses into jumbo territory at a lower balance than a borrower on either coast.
Because a jumbo loan can’t be sold to Fannie Mae or Freddie Mac, the lender or a private investor carries the risk to maturity, and underwriting tightens accordingly. Lenders in Align’s network typically want a 680 credit score at minimum, debt-to-income under 45%, at least 20% equity, and six months of full mortgage payments in liquid reserves.1 The upside is scale: shaving 0.50% off a $2 million balance is worth roughly $10,000 in first-year interest.
Learn what makes a refinance jumbo, what lenders check, what it costs, and how the savings math changes at seven-figure balances. Still deciding which refinance type fits? Start with our refinancing and home equity guide.
Key takeaways:
- Check the limit before you assume you need a jumbo: The 2026 baseline conforming limit is $832,750 in all 83 Michigan counties, and a new balance below that line qualifies for conforming pricing and easier underwriting.
- Reserves are the requirement that surprises jumbo borrowers: Six months of full payments in liquid assets is the common floor, and some investors want 12 once the balance passes $1.5 million.
- Small rate improvements move large dollars: A 0.50% rate cut is worth roughly $5,000 a year in interest on a $1 million balance and $10,000 on a $2 million balance, so refinance math that fails on a $300,000 loan clears easily here.
Hypothetical example, not an offer. Actual rates, costs and payments vary.
What counts as a jumbo refinance?
A jumbo refinance is a refinance above the conforming loan limit, and for 2026 that line sits at $832,750 for a one-unit property in most of the country. FHFA raises the limit annually under the Housing and Economic Recovery Act to track average U.S. home prices; prices rose 3.26% between the third quarters of 2024 and 2025, so the limit climbed $26,250. High-cost counties run higher, to a ceiling of $1,249,125, or 150% of the baseline. Look up FHFA’s current conforming loan limits by county before you apply.
Two details trip people up. The limit scales with unit count, not just geography: a Michigan two-unit property stays conforming up to $1,066,250, a three-unit to $1,288,800, a four-unit to $1,601,750. And what matters is the new loan amount, not the old one, so paying the balance down or bringing cash to closing can land you under the line as a conforming borrower. Our walkthrough of how to qualify for a jumbo loan covers the purchase side of the same standards.
The Consumer Financial Protection Bureau puts the difference plainly: because jumbo loans can’t be purchased by Fannie Mae or Freddie Mac, they must be held by the originating lender or sold in the private market, and obtaining one may cost more than a conforming mortgage.
Why refinance a jumbo loan?
The reasons are the same as any refinance, but each one is worth more because the balance is bigger.
- Lower the rate: Every 0.25% you cut is worth $2,500 a year in interest on a $1 million balance.
- Shorten the term: Moving from 30 years to 15 raises the payment but strips decades of interest off a large balance. See refinancing to a shorter loan term.
- Get off an adjustable rate: Jumbo ARMs are common because the start rate is lower, but a 1% adjustment on a $1.5 million balance adds roughly $15,000 a year in interest. Our breakdown of adjustable-rate mortgage pros and cons explains the caps.
- Drop into conforming territory: If your balance is within reach of $832,750, paying it down at closing can move you onto a conforming loan with automated underwriting.
- Take cash out: Jumbo cash-out exists, but expect to leave 25% to 30% equity in the home rather than the 20% Fannie Mae allows.
Hypothetical example, not an offer. Actual rates, costs and payments vary.
What do lenders require to refinance a jumbo loan?
Expect a 680 minimum credit score, debt-to-income under 45%, at least 20% equity, and six months of payments in reserves. None of those numbers come from a government agency or a GSE rulebook. Individual banks and private investors who hold jumbo paper set them, which is why they vary by lender and why shopping matters more here than on a conforming file.2
| Requirement | Typical jumbo standard | Conforming standard (Fannie Mae) |
|---|---|---|
| Credit score | 680 minimum, 700+ for the best pricing | Assessed by Desktop Underwriter as part of the full risk profile |
| Debt-to-income ratio | Under 45%, some investors cap at 43% | Up to 50% with a Desktop Underwriter approval |
| Max LTV, rate-and-term | 80%, meaning 20% equity retained | 95% on a one-unit primary residence; 97% only when Fannie Mae already owns the loan being refinanced |
| Max LTV, cash-out | 70% to 75%, meaning 25% to 30% equity retained | 80% on a one-unit primary residence |
| Reserves | 6 months of full payments, 12 on larger balances | Determined by Desktop Underwriter |
| Appraisal | Full interior appraisal, sometimes two | Appraisal waiver possible on eligible files |
| Underwriting | Manual review of the complete file | Automated |
| Cash-out seasoning | Investor-set, commonly 6 to 12 months | 6 months on title before disbursement |
Four rows deserve a closer look.
- Credit score is a pricing lever, not just a gate: The gap between a 680 file and a 740 file shows up as rate, and a quarter point on a $1.5 million balance is $3,750 a year. See what counts as a good credit score.
- Debt-to-income is measured the same way, judged harder: Jumbo investors want it under 45%; Fannie Mae approves up to 50% through Desktop Underwriter. If yours is close, improving your debt-to-income ratio is faster than raising a score.
- Equity is measured against a full appraisal: Your loan-to-value ratio is the new loan divided by appraised value, and the appraiser’s number governs. Federal rules entitle you to a free copy of every appraisal promptly upon completion, or three business days before closing, whichever comes first.
- Reserves mean liquid assets left after closing: Six months of principal, interest, taxes and insurance must remain available once the loan funds, with retirement and brokerage accounts usually counted at a discount. Because a person reads the file instead of an algorithm scoring it, expect mortgage underwriting to go deeper than on your last conforming loan.
One rule does come from Washington and applies to every mortgage: the ability-to-repay requirement. Lenders often cite a 43% debt-to-income ceiling as if it were federal law. It isn’t anymore. The CFPB removed that limit from the General Qualified Mortgage definition and replaced it with a price-based test comparing your annual percentage rate to the average prime offer rate, for applications received on or after October 1, 2022.
What does a jumbo refinance cost?
Freddie Mac puts refinancing costs at 3% to 6% of loan principal, a useful band on a $300,000 loan and a misleading one on a $1.2 million loan, where it implies $36,000 to $72,000. Most jumbo refinances don’t reach the top of that range, because much of the fee stack is flat dollars. A Michigan register of deeds charges $30 per document regardless of page count, and the credit report, flood certification and underwriting fee cost the same on a $2 million loan as on a $200,000 one.
What does scale is anything quoted as a percentage: origination, discount points and the title premium. That’s where jumbo quotes separate, and why you compare dollars rather than percentages. Your lender must deliver a Loan Estimate within three business days of your application, and federal rules fix the form’s categories, order and math, so two read side by side without translation. Start by comparing jumbo offers on the Loan Estimate, then work through refinancing closing costs.
One protection is specific to refinancing: if you refinance your primary residence with a new lender, federal law gives you until midnight of the third business day after closing to cancel. The clock starts only once you’ve signed the note, received your Closing Disclosure, and received two copies of the notice explaining the right.
How much does a jumbo refinance actually save?
Start with the simplest version: first-year interest savings are roughly the rate reduction times the balance. That’s why a 0.25% improvement most homeowners would ignore is worth chasing at jumbo size.
| Loan balance | 0.25% lower | 0.50% lower | 0.75% lower |
|---|---|---|---|
| $1,000,000 | $2,500 a year | $5,000 a year | $7,500 a year |
| $1,500,000 | $3,750 a year | $7,500 a year | $11,250 a year |
| $2,000,000 | $5,000 a year | $10,000 a year | $15,000 a year |
Now the payment version. Say you owe $2 million at 7.00% and refinance into a new 30-year fixed at 6.50%. The payment falls from about $13,306 to about $12,641, a $665 monthly difference and $7,976 a year, while first-year interest drops from roughly $139,356 to $129,342. Across a full 30-year term the total payments differ by about $239,000.3
Break-even is total closing costs divided by monthly savings: at $18,000 and $665 a month, you’re even in 27 months, and selling or refinancing again inside that window means the deal doesn’t pay. Two cautions. Resetting a seasoned loan to a fresh 30-year term re-front-loads interest, so compare total interest remaining, not payments alone. And the weekly rate quoted in the news isn’t your rate. Freddie Mac’s Primary Mortgage Market Survey covers conforming loans within FHFA’s limits, which excludes jumbo pricing by definition.
Hypothetical example, not an offer. Actual rates, costs and payments vary.
When a jumbo refinance gets complicated
Anything that adds risk to a file with no GSE backstop gets scrutinized harder. Four situations come up most often.
- Attached and non-warrantable property: Condos face project review on top of borrower review, covering owner-occupancy ratios, reserves and litigation.
- A prior loan modification: A modification is not a refinance, and jumbo investors read it carefully. Waiting periods afterward are investor-set rather than agency-published, so they differ by lender.
- A bankruptcy or foreclosure in the file: Waiting periods differ by chapter and by program, and jumbo investors generally require longer seasoning than agency guidelines. Confirm your date before assuming you’re eligible, and read refinancing after bankruptcy first.
- Self-employment or equity compensation: Manual underwriting means a person reconciles two years of business and personal returns against your K-1s and vesting schedules.
None of these disqualify you automatically. They’re reasons the answer varies by lender, which is the argument for shopping the file instead of applying once. Our index of refinance situations covers the other edge cases.
How a jumbo refinance affects your mortgage interest deduction
This is where jumbo borrowers lose money without noticing. The IRS caps deductible home acquisition debt at $750,000 for debt secured after December 15, 2017, and at $1 million for debt secured after October 13, 1987 and before December 16, 2017. Grandfathered treatment under the $1 million limit survives a refinance only if the new amount isn’t more than the principal left on the old debt.4
The same logic governs ordinary acquisition debt. Debt used to refinance home acquisition debt is itself acquisition debt, but only up to the old mortgage principal just before the refinancing. And the use-of-proceeds rule is absolute: no matter when the debt was incurred, you can’t deduct interest on proceeds not used to buy, build, or substantially improve the home. On a jumbo cash-out, the portion funding a business, securities or tuition generally produces no deduction at all. Talk with a tax professional before you size it.
What Michigan homeowners should know
Michigan homeowners hit the jumbo threshold sooner than borrowers in high-cost states, and the state’s closing mechanics work in their favor.
- All 83 counties use the $832,750 baseline: FHFA’s 2026 county file gives no Michigan county a high-cost designation, so the $1,249,125 ceiling applies nowhere in the state. A lakefront home in Oakland County and a farmhouse in Alcona County cross into jumbo territory at the same balance.
- Multi-unit property buys you room: The Michigan two-unit conforming limit is $1,066,250, the three-unit limit $1,288,800 and the four-unit limit $1,601,750. An owner-occupied Waterford duplex carries a far larger conforming balance than the house next door.
- No transfer tax on a refinance: Michigan’s transfer tax attaches to instruments that convey property for consideration, and the seller owes it. A refinance records a mortgage rather than a deed, so the $8.60 per $1,000 charged at a purchase closing, $7.50 state plus $1.10 county, isn’t on your settlement statement.
- Recording is $30 per document: A Michigan register of deeds charges a flat $30 regardless of page count, a rounding error against a seven-figure balance and one more reason percentage-based estimates overstate jumbo closings.
Because we’re an independent broker rather than one lender, we can place a jumbo refinance with whichever investor prices your file best. Here’s how working with a mortgage broker changes what you see.
How Align handles a hard refinance
Low equity, a credit setback or an unusual property can make a refinance look impossible at one lender and workable at another. Lenders add their own rules on top of the program's.
Samantha takes your file to the wholesale lender whose rules fit it, and if waiting is the better move, she tells you that instead.
Already have an offer from your current servicer or one of the big national lenders you see advertised? Bring us the Loan Estimate. We will compare it line by line and show you where we can do better.
FAQ: Refinancing a jumbo loan
Here are answers to common questions about refinancing a jumbo loan.
What counts as a jumbo loan in 2026?
Any mortgage above the conforming loan limit set by FHFA, which is $832,750 for a one-unit property in most counties in 2026 and up to $1,249,125 in high-cost areas. All Michigan counties use the baseline. If your balance lands just above the line, bringing cash to closing moves you into conforming territory, so check refinancing eligibility first.
How much equity do I need to refinance a jumbo loan?
At least 20% for a rate-and-term refinance with most lenders, and 25% to 30% for a jumbo cash-out. Equity is measured against a full appraisal rather than an automated valuation, and lenders in our network often order two independent appraisals once the balance passes roughly $1.5 million. Because the threshold is firm, understand how the home appraisal process works before you apply.
Are jumbo refinance rates higher than conforming rates?
Not necessarily. Jumbo pricing comes from individual banks and private investors instead of a single GSE pricing grid, so quotes on the same file spread further apart than conforming quotes do, sometimes in your favor. Freddie Mac’s Primary Mortgage Market Survey tracks conforming loans only, so the weekly headline rate isn’t a jumbo rate. Our jumbo loan tips cover shopping the spread.
What documentation does a jumbo refinance require?
Two years of complete personal and business tax returns, two months of statements for every asset account including retirement and brokerage, year-to-date profit and loss if you’re self-employed, and proof of reserves. Underwriting reviews the full picture rather than pulling an automated approval, so gathering documents first avoids adding weeks. Start with mortgage options for self-employed borrowers.
The bottom line on refinancing a jumbo loan
A jumbo refinance is any refinance above the conforming loan limit, $832,750 for a one-unit property in 2026 and the figure that applies in all 83 Michigan counties. Because the loan can’t be sold to Fannie Mae or Freddie Mac, expect stricter standards: a 680 credit score at minimum, debt-to-income under 45%, 20% equity for rate-and-term and 25% to 30% for cash-out, and six months of payments in reserves. Those numbers come from individual investors rather than a rulebook, so they move lender to lender, and the payoff scales with the balance: a 0.50% rate cut is worth roughly $10,000 a year on a $2 million loan.
Hypothetical example, not an offer. Actual rates, costs and payments vary.
If you’re ready to see what your jumbo refinance would really cost, talk to Align Lending. We’ll shop your scenario across our lender network and put competing offers in front of you side by side. Call 248-506-5727 or book a time with Samantha.
Footnotes:
1. Jumbo credit score, debt-to-income, equity and reserve standards are set by the individual banks and private investors that hold jumbo loans, not by a government agency or by Fannie Mae or Freddie Mac. The figures described here reflect what lenders in Align Lending’s network typically require and are subject to change; your actual requirements depend on the investor, your file and market conditions. Return to text.
2. The same applies to every jumbo standard in the comparison table. Jumbo requirements are lender and investor overlays. The conforming column reflects published Fannie Mae Selling Guide and Eligibility Matrix standards, which are subject to change. Return to text.
3. Example figures in this article 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. The 7.00% and 6.50% rates are illustrative and are not offered rates. Your rate, payment and total interest depend on your application, loan amount, term, program and market conditions, and will be itemized on your Loan Estimate and Closing Disclosure. Return to text.
4. This is general information, not tax advice. Deductibility depends on your individual circumstances, on how loan proceeds are used, and on whether you itemize. Consult a qualified tax professional about your situation. Return to text.
Sources: 2026 baseline conforming loan limit value of $832,750 for one-unit properties, an increase of $26,250 from 2025, the 3.26% average house price increase between the third quarters of 2024 and 2025, and the high-cost ceiling of $1,249,125, Federal Housing Finance Agency, “FHFA Announces Conforming Loan Limit Values for 2026.” One-unit limit of $832,750 in all 83 Michigan counties and Michigan two-, three- and four-unit limits of $1,066,250, $1,288,800 and $1,601,750, FHFA 2026 full county loan limit list (HERA-based). Definition of a jumbo loan as a mortgage above the conforming loan limit that cannot be purchased by Fannie Mae or Freddie Mac and may cost more than a conforming mortgage, Consumer Financial Protection Bureau, “What is a jumbo loan?” Maximum LTV of 95% on a one-unit principal residence limited cash-out refinance, with 95.01% to 97% permitted only where the lender informs Desktop Underwriter that Fannie Mae owns or securitized the existing loan and the new loan is a non-high-balance fixed-rate mortgage on an owner-occupied property, Fannie Mae Selling Guide B2-1.3-02 and Fannie Mae Eligibility Matrix. Maximum LTV of 80% on a one-unit principal residence cash-out refinance, Fannie Mae Eligibility Matrix. Maximum DTI ratio of 50% for loan casefiles underwritten through Desktop Underwriter, Fannie Mae Selling Guide B3-6-02. Six-month ownership requirement before the disbursement date on a cash-out refinance, Fannie Mae Selling Guide B2-1.3-03. Removal of the 43% DTI limit from the General QM loan definition, its replacement with a price-based APR-to-APOR threshold, and the October 1, 2022 mandatory compliance date, CFPB General QM Final Rule, 12 CFR § 1026.43(e)(2). Refinancing costs of 3% to 6% of loan principal, Freddie Mac (My Home by Freddie Mac, “Understanding the costs of refinancing”). Loan Estimate delivery within three business days of application, 12 CFR § 1026.19(e)(1)(iii). Free copy of appraisals and written valuations promptly upon completion or three business days before consummation, whichever is earlier, 12 CFR § 1002.14(a)(1). Three-business-day right of rescission on a refinance secured by a principal dwelling and the three events that start the clock, 12 CFR § 1026.23. Primary Mortgage Market Survey coverage of conventional, conforming loans within FHFA loan limits, Freddie Mac. Home acquisition debt limits of $750,000 and $1 million, continuation of grandfathered treatment on a refinance only up to the principal remaining, treatment of refinanced acquisition debt only up to the old balance just before refinancing, and non-deductibility of interest on proceeds not used to buy, build or substantially improve the home, IRS Publication 936. Michigan state real estate transfer tax of $3.75 per $500 and seller liability, MCL 207.523 and MCL 207.525; Michigan county real estate transfer tax of 55 cents per $500, MCL 207.504. Register of deeds recording fee of $30 per document regardless of page count, MCL 600.2567.
This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Loan limits, program rules, investor guidelines and tax provisions change and vary by property, county and lender; confirm your figures with your Loan Estimate and Closing Disclosure and 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 change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154.
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