5 Tips for Refinancing Your Jumbo Loan

The lending requirements for a jumbo loan are much more difficult to meet than a standard, conforming loan. These same requirements apply if you’re looking to refinance your jumbo loan. But if interest rates are low enough, refinancing could save borrowers who took on oversized loans quite a bit of money. Before you begin applying for a refi, though, consider the tips below. These include checking your credit score, having your financial documents ready to go and figuring out how much refinancing could save you.

Refinancing is a major financial move, so consult with a financial advisor to see how it could affect your long-term financial plans.

Understanding Jumbo Loans

A jumbo loan is a type of mortgage that exceeds the conforming loan limits set annually by the Federal Housing Finance Agency (FHFA). Conforming loan limits define the maximum loan amounts eligible for purchase by government-sponsored enterprises like Fannie Mae and Freddie Mac. Because jumbo loans exceed these limits, they are not backed by these entities and are provided by private lenders, often with stricter qualification requirements.

For 2025, the FHFA increased the baseline conforming loan limit to $806,500, up from $766,550 in 2024, reflecting rising home prices. In high-cost areas, where property values significantly exceed national averages, the limit can reach $1,209,750, or 150% of the baseline. These limits vary by region, with lower limits in areas where housing costs are below average.

Tip #1: Calculate How Much Refinancing Could Save You

If you want to refinance in order to save money, it helps to know how much you stand to gain versus what you have to put toward closing costs. Comparing your current interest rate and payment amount to the rate you expect to get by refinancing can give you an idea of whether it’s even worth pursuing.

Don’t forget to think about the break-even period, or the point at which you earn back the costs of refinancing through your interest savings. If you have a jumbo loan, even a fraction of a difference in your interest rate can have a significant impact on your long-term savings.

Tip #2: Decide Whether You’ll Cash Out Any Value

With home values on the rise, many jumbo loan holders are using a refinance as an opportunity to tap into some of the equity they’ve built. If you need extra money to finance a home renovation or consolidate debt, you can try to get extra cash through a cash-out refinance.

Even if you’re not planning to do a cash-out refinance, it’s a good idea to know how much equity you have. If you have a large amount of home equity, it’ll be easier to convince your lender to let you refinance your jumbo loan. As a general rule, it’s best to have at least 20% equity in your home before you start approaching lenders about a new loan.

Tip #3: Check Your Credit Score & Recent History

Refinancing any mortgage loan involves a credit score and history check. And when it comes to refinancing jumbo loans, lenders are looking for how strong someone’s credit rating is.

This is because there’s usually more money on the line. Plus, jumbo loans are not backed by Fannie Mae and Freddie Mac, as they are larger than the conforming loan limits set by the FHFA. Without this backing, lenders will be on the hook for any mortgages that default.

Not only does your credit score affect whether you can refinance your jumbo loan but it also has an impact on the kind of interest rates you qualify for. It’s best to work on pushing your FICO score past the 700-mark if you want access to the most favorable terms.

Tip #4: Get Your Documentation in Order

Underwriting rules for jumbo loans have become more stringent since the housing collapse. That means you’ll need to have all your paperwork in order if you want a shot at refinancing your mortgage. That’s why it’s a good idea to take some time to collect your pay stubs for the past two to three months, your tax returns from the past two years and your bank statements from the past six months.

If you’re self-employed, be prepared to provide a copy of a profit and loss statement, along with references to verify your employment status if you’re working as an independent contractor.

Tip #5: Thoroughly Research Current Refinance Rates

Before you refinance any loan, it’s important to compare rates from different lenders. That way you’ll have an idea of what you’ll qualify for. Shopping around might also give you an opportunity to negotiate terms if you find a lender you want to work with.

Aside from haggling your way to a better rate, it’s a good idea to try and score a deal on your closing costs since they can add thousands of dollars to the cost of your refinance.

Bottom Line

Refinancing could be a lifesaver for homebuyers who got a jumbo loan at a time when mortgage rates were unfavorable. But just like applying for a jumbo loan, the process for refinancing is difficult and littered with stringent requirements. Therefore it’s imperative that you have your finances and documentation in order before you even begin applying.

Refinancing Tips

A financial advisor can help you understand how a mortgage fits into your overall financial plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you’re not sure about refinancing, stop by SmartAsset’s refinance calculator to see what it could do for you. All you need to know to use it is your home’s value and your refinance term, interest rate and closing costs.