Updated 03/2025
If you’re planning to buy a home in Arizona, you have several options, including a conventional mortgage, FHA, VA, or USDA loan. But if you’re purchasing an expensive property, you may find that traditional loans won’t provide enough financing.
Fortunately, jumbo loans may be the solution. This article will explain what jumbo loans are, the requirements to qualify, and the updated jumbo loan limits for 2025.
What Is a Jumbo Loan?
A jumbo loan is a specialized type of financing designed to help you buy a property that exceeds the conventional mortgage limit.
Conventional loans have borrowing caps even if you meet all eligibility requirements. According to the Federal Housing Finance Agency (FHFA), the 2025 conforming loan limit for a one-unit home in Arizona is $806,500. This is the maximum amount you can borrow using a conventional mortgage.
Unlike conventional loans backed by government-sponsored enterprises like Fannie Mae and Freddie Mac, jumbo loans are not sold to these entities. As a result, they come with stricter qualification requirements for borrowers, making them a more complex but crucial option for those seeking substantial home financing.
Why Choose a Jumbo Loan?
If you’re considering buying a home priced above the conforming loan limit, a jumbo loan can help cover the gap without requiring a massive down payment. While you could potentially opt for a conventional mortgage and make up the difference with cash, this often isn’t practical for high-value properties.
Jumbo loans provide flexibility for purchasing a dream home, vacation property, or investment property without being constrained by standard lending caps. They also offer competitive interest rates similar to conventional loans, making them an attractive option for buyers who meet the qualification requirements.
Arizona Jumbo Loan Limit
In Arizona, the conforming loan limit for a single-family property in 2025 is $806,500. Any mortgage amount exceeding this threshold is classified as a jumbo loan and comes with stricter eligibility requirements due to the increased financial risk for lenders.
Jumbo loans are ideal for buyers looking to purchase luxury homes, properties in high-demand areas, or multi-acre estates. They can also be useful for buyers who want to invest in Arizona’s growing real estate market, which continues to see rising property values.
They are particularly valuable in growing markets like Arizona, where property values have steadily increased in recent years. Major metro areas such as Phoenix, Scottsdale, and Tucson often have properties priced beyond the conforming loan limits, making jumbo loans essential for financing more expensive homes.
Jumbo Loan Requirements
It can be more challenging to qualify for a jumbo loan than a conventional mortgage. Here are the typical requirements:
- Credit score: Most lenders require a credit score of at least 720, though some may accept lower scores.
- Debt-to-income (DTI) ratio: Many lenders require a DTI no higher than 45%.
- Down payment: Expect to put down at least 20% of the home’s purchase price. For a $1 million home, this means a down payment of $200,000 or more.
- Financial documentation: You’ll need bank statements, two to three years of tax returns, and W-2 or 1099 forms.
Requirements may vary by lender, so it’s worth shopping around. Some lenders may allow for lower down payments or more lenient terms.
Types of Jumbo Loans
Jumbo loans offer various types of financing structures to fit different borrower needs. Below are the most common options:
- Jumbo fixed-rate mortgage: With a jumbo fixed-rate mortgage, your interest rate and monthly payment remain consistent for the duration of your loan, typically 15, 20, or 30 years. This stability makes budgeting easier and is ideal when interest rates are low. However, if rates drop during your loan term, you would need to refinance to take advantage of those lower rates.
- Jumbo adjustable-rate mortgage (ARM): A jumbo ARM typically offers a fixed interest rate for the first few years—usually five, seven, or 10 years—before transitioning to a variable rate that adjusts annually based on market conditions. This option may be attractive if you plan to sell or refinance the property before the adjustable period begins.
- Jumbo cash-out refinance: If you already have a jumbo loan with a high-interest rate, refinancing can help you secure a lower interest rate. A cash-out refinance allows you to borrow more than what you owe on your current mortgage, providing a lump sum of cash for major expenses like home renovations, debt consolidation, or other significant financial needs.
Each jumbo loan type has its pros and cons, so it’s essential to assess your long-term financial goals and discuss your options with a knowledgeable lender.
Tips for Securing a Jumbo Loan
- Improve your credit score: Aim for a credit score of 720 or higher to increase your chances of approval and secure better interest rates.
- Lower your debt-to-income ratio: Pay down existing debts to keep your DTI below 45%.
- Save for a larger down payment: The more you can put down, the better your chances of approval.
- Shop around for lenders: Different lenders have different requirements and interest rates, so comparing multiple offers can help you find the best deal.
Apply for a Jumbo Loan to Secure Your Next Home
Conventional loans are practical for many home purchases. However, if you need to borrow more than $806,500 in 2025 for your Arizona home, a jumbo loan can provide the financing you need.
Arizona Central Credit Union is here to help with all your banking needs, from mortgage loans to checking and savings accounts. If you have questions, contact us online or call (866) 264-6421.
