Jumbo Loan Refinance: How It Works and When to Do It

Jumbo loans are a great option if you want to purchase a home for more than conforming loan limits allow. If you already have a jumbo loan but are locked into a high interest rate, you might wonder if a jumbo loan refinance is a good idea or even possible.

Keep reading as we explore everything you need to know about refinancing a jumbo loan to help you decide if it’s the best financial move for your situation.

Why Is It Harder to Refinance a Jumbo Loan?

Refinancing a jumbo loan provides borrowers the same benefits as refinancing a conventional loan. You can lower your interest rate, shorten or lengthen your loan term, switch from an adjustable-rate to a fixed-rate mortgage, or access some of the equity in your home.

However, approval for a jumbo loan refinance tends to be more difficult for several reasons. 

Because lenders are loaning a significant sum through a jumbo loan, they want to ensure their money is safe, so they look at your finances a little closer. Many lenders want a higher credit score, a low debt-to-income ratio (DTI), and more cash reserves.

Along with being more difficult to get, jumbo loans can also cost more than conventional loans. Because you’re borrowing more money, your closing costs increase. Plus, jumbo loan refinance rates tend to be higher than conventional mortgage rates.

When You Should Refinance Your Jumbo Loan

You can choose to refinance your jumbo loan at any time. Many people refinance after interest rates have dropped to help reduce their monthly mortgage payments. It’s also common to refinance if you want to access some of the equity in your home or change your mortgage terms to pay off your loan faster.

However, before moving forward with a refinance, understand that significantly fewer lenders offer jumbo loans than conventional loans. Plus, because jumbo loan lenders are typically more picky with their approval process, you want to ensure your finances are in good shape before applying. 

Requirements for Refinancing a Jumbo Loan

Before you start your refinance, it’s important to understand what lenders analyze during the underwriting process.

Credit Score

Lenders use credit scores to understand how financially responsible you are. The higher your credit score, the better your chance for approval and the lower your interest rate. While the exact credit score needed varies by lender, below is a guide for the median credit score minimums needed for different jumbo loan products.

• 30-year fixed jumbo loan: 680
• 15-year fixed jumbo loan: 740
• Adjustable-rate loan: 740

Debt-to-Income Ratio (DTI)

Your debt-to-income (DTI) ratio helps lenders understand how much of your monthly income goes toward your debt payments. The lower your DTI, the more cash you have available to make your monthly mortgage payment.

The exact DTI requirements vary by lender, but it’s no higher than 45%. The lower your DTI, the better your chances of loan approval.

Cash Reserves

Lenders hope to see a significant amount of cash reserves available. With a cash reserve available, you can still make your monthly mortgage payment if you lose your job or have another financial emergency.

While the exact dollar amount needed as cash reserve fluctuates across lenders, most want six to 12 months of expenses.

History of Bankruptcy

Having a recent bankruptcy won’t make it impossible to refinance a jumbo loan, but it makes the process a little more complicated. Most lenders require the bankruptcy to fall off your credit report before moving forward with a refinance, which could be as long as seven years for a Chapter 13 filing or 10 years for a Chapter 7 one.

Home Equity

Mortgage lenders want you to have equity in your home before moving forward with a jumbo loan refinance. The amount of equity needed is even greater if you refinance to a cash-out jumbo loan. Depending on your lender, you need anywhere from 20% to 30% equity in your home after completing your refinance.

The Process for Refinancing a Jumbo Loan 

Once you’re ready to proceed, here is the process for refinancing a jumbo loan.

1. Choose your lender: Lenders offering jumbo loans are less common than conventional loans, so it might take you a little longer to find the right one. Apply with at least three lenders to compare their interest rates and fees. However, make sure you complete your applications within 30 days, so they all count as one inquiry on your credit report.
2. Get your documentation ready: Once you’ve picked your lender, gather your documents. This speeds up the entire process and avoids delays. You need bank and investment statements, tax returns, pay stubs, and any other proof of income you may have.
3. Have your home appraised: Your lender then has a home appraisal completed so they can see how much your home is worth. This impacts the amount you can borrow. If you use a cash-out jumbo refinance, the appraisal also impacts how much equity you can access.
4. Your lender completes the underwriting process: During the underwriting process, your lender digs into all your submitted documents and deep dives into your credit report to ensure you’re a suitable borrower and the risk isn’t higher than they want to take on. Your lender will likely have questions or need additional documents during the process. Make sure you respond quickly to avoid any delays in reaching closing.
5. Closing: Once approved, it’s time to close on your loan, where you pay closing costs. These costs vary by lender but are usually between 2% and 6% of the loan amount. You can pay closing costs upfront or add them to your loan.

Jumbo Loan Modifications

If you’re struggling to make your mortgage payments or your finances are less than ideal, you may find that a jumbo loan modification makes more sense than refinancing. With loan modification, you work with your lender to find ways to make your loan more affordable. 

You can do this a couple different ways. You could agree to a temporary reduction in your interest rate or lengthen the terms of your current loan. You could also use a combination of both. The end result is a more affordable loan payment. 

However, one thing to keep in mind is that if your loan modification includes an interest rate reduction, this is usually temporary and reverts to the old rate after so many months.

Can You Take Cash Out? 

If you want to take cash out of your home with a refinance, you can use a cash-out jumbo loan refinance. Like a conventional cash-out refinance, you replace your current loan, but with a higher principal balance. You receive the difference in cash and can use it for things like home improvements, paying down high-interest debt, or anything else.

When you use a cash-out jumbo loan refinance, lenders require you to have enough equity to leave at least 20% to 30% after refinancing. These loans also typically have a slightly higher interest rate than your regular jumbo loans.

Can You Refinance to a Conventional?

If you currently have a jumbo loan, you may consider refinancing to a conventional loan. While possible, it depends on how much you still owe on your loan.

Not only will you need to find a lender for your refinance, but your loan balance must have dropped below conforming loan limits. In 2026, this is $832,750 unless you live in a high-cost area where the limit is $1,249,125. 

If your loan balance has fallen below this amount, you may benefit from refinancing to a conventional loan. The biggest advantage is that interest rates on conventional loans can be less than jumbo loans, meaning your mortgage payments will be lower. 

Jumbo Loan Refinance: The Bottom Line

Refinancing a jumbo loan can help you secure a lower interest rate, adjust your loan terms, or access your home equity. While the approval process is more stringent than conventional refinances, being prepared with strong credit, low debt-to-income ratios, and substantial cash reserves can position you for success.

Ready to explore your jumbo loan refinance options? Start your application with Refi.com today and discover how much you could save on your monthly mortgage payment.