Refinance Jumbo Loan: Requirements, Pros & Cons

Refinancing a jumbo loan can transform your financial landscape, whether you’re aiming to lower your interest rate, adjust your loan term, or tap into home equity. A jumbo mortgage, defined as a loan exceeding the conforming loan limits set by the FHFA (Federal Housing Finance Agency), comes with unique opportunities and challenges.

As of 2025, the [FHFA sets the conforming loan limit])(https://better.com/content/fhfa-loan-limit-increase-2025/) at $766,550 in most areas, meaning anything above that qualifies as a jumbo loan. With stricter requirements from lenders—like higher credit scores, lower debt-to-income (DTI) ratios, and larger cash reserves—refinancing a jumbo mortgage demands careful consideration.

In this guide, we’ll explore the pros and cons of refinancing a jumbo loan, outline your options, and show how Better simplifies the process with competitive rates and a streamlined approach. Whether you’re new to jumbo mortgages or a seasoned homeowner, here’s everything you need to know to refinance smartly.

When to refinance a jumbo loan?

You might consider refinancing a jumbo loan when interest rates drop significantly, as even a small reduction can lead to substantial savings on a large loan balance. For instance, if rates fall by 0.5% or more, refinancing could lower monthly payments. Another time to consider refinancing is when your financial situation improves. Having a higher credit score, increased income, or reduced debt could qualify you for better terms.

Market conditions also play a role; refinancing makes sense when home values rise, increasing equity and potentially securing a lower loan-to-value (LTV) ratio. Timing is key, so it's important to monitor economic trends, like Federal Reserve actions or housing market shifts, to seize opportunities.

Beyond timing, several factors are worth considering:

• Closing costs: Jumbo loans often come with higher fees (e.g., appraisal, title, and origination costs), so it's important to make sure the savings outweighs these expenses. Check out Better's guide on how much it costs to refinance.
• Credit score impact: A strong score (typically 700+) is critical for favorable rates.
• Debt-to-income ratio (DTI): Lenders prefer a DTI below 43%, so paying down debt beforehand may help.
• Equity Requirements: Most jumbo refinances require at least 20% equity, though some lenders may demand more.
• Loan term options: Decide between lowering monthly payments with a longer term or saving on interest with a shorter one.

Refinancing a jumbo loan: process and requirements

Refinancing a jumbo loan can replace your high-value mortgage to one with lower rates, different terms, or with one that allows you to tap equity. Generally speaking, refinancing a jumbo loan starts with an application and ends with closing after underwriting and appraisals are complete.

Better streamlines this process, starting with a pre-approval. Better's pre-approval takes as little as 3 minutes with no impact to your credit score. 

....in as little as 3 minutes – no credit impact

If you are looking to refinance your jumbo loan, these are the general requirements that come with the process:

Credit score

A minimum credit score of 680-740 is required for more jumbo loan refinances. 

Debt-to-income ratio

Lenders typically cap DTI at 36-45% to ensure you can manage payments.

Required documents

You’ll need tax returns, pay stubs, and bank statements to verify income and reserves.

Cash reserves

Expect to show 6-18 months of mortgage payments in liquid assets for lender security.

Should you refinance your jumbo loan?

Pros of Refinancing a Jumbo Loan

Refinancing a jumbo mortgage offers compelling benefits, especially when interest rates dip or your financial goals shift. Here’s why homeowners choose to refinance their jumbo loans:

• Lower interest rates: A drop in your interest rate can save thousands over the loan term. For a $1.2 million jumbo loan, reducing the interest rate from 6% to 5% could cut your total interest by over $240,000. Better helps you lock in these savings effortlessly.

• Reduced monthly payments: Adjusting your loan term or securing a better interest rate can lower monthly costs, easing pressure on your debt-to-income ratio. 

• Access to home equity: A cash-out refinance lets you use equity for renovations, debt consolidation, or other needs. With Better’s guide to cash-out refinance, you’ll see how lenders assess your loan-to-value (LTV) ratio—typically capping it at 80%—to determine eligibility.

• Better loan terms: You may decided to switch from an adjustable-rate jumbo mortgage to a fixed-rate option, which offers stability, especially if interest rates are volatile. This tweak to your loan term or type can align with your long-term plans.

Cons of refinancing jumbo loan

Despite the perks, refinancing a jumbo mortgage has drawbacks. Some lenders impose strict standards, and costs can add up. Here’s what to watch for:

• Higher closing costs: Expect closing costs of 3% to 6% of your jumbo loan amount. For a $1.5 million jumbo mortgage, that’s $45,000 to $90,000. Curious about specifics? Better’s guide on how much it costs to refinance breaks it down.

• Cash-out limits: Lenders often limit equity withdrawal based on your loan-to-value ratio, requiring at least 20% equity to remain post-refinance. This protects your jumbo loan from over-leveraging.

• Stricter requirements: Unlike conforming loans, jumbo mortgages aren’t backed by the FHFA, so lenders typically require a credit score of 700+, a DTI below 43%, and cash reserves covering 6-12 months of payments. You may also need to submit detailed bank statements. See Better’s jumbo loan requirements and qualifications for more.

• Risk of foreclosure: Extending your loan term or cashing out too much equity can strain your debt-to-income ratio, especially if cash reserves dwindle. Falling behind on a jumbo mortgage increases foreclosure risk.

Better.com offsets these hurdles with tailored refinance options, ensuring you meet lender criteria with minimal stress.

....in as little as 3 minutes – no credit impact

Jumbo loan refinancing options: customized for you

Refinancing a jumbo loan isn’t one-size-fits-all. Here are key ways to tailor your jumbo mortgage to your goals:

Change your loan term

Shorten your loan term (e.g., 30 to 15 years) to pay off your jumbo loan faster and save on interest—or extend it to lower monthly payments. This impacts your debt-to-income ratio and total cost. Use Better’s refinance calculator to test scenarios.

Secure a lower interest rate

When market interest rates fall below your current jumbo mortgage rate, refinancing locks in savings that could make your monthly payment smaller, boosting your cash reserves.

Switch to a conforming loan

If your jumbo loan balance dips below the FHFA’s conforming loan limit ($766,550 in 2025), refinancing to a conforming loan reduces lender scrutiny. With a lower loan-to-value ratio and solid credit score, this can simplify approval.

Cash out refinancing

Tap equity with a cash-out refinance for home upgrades or debt payoff. Lenders assess your loan-to-value ratio and cash reserves, typically requiring 20% equity post-refinance. Better’s guide to cash-out refinance explains it all.

Adjust loan type

Switching from an ARM to a fixed-rate jumbo mortgage ensures stable payments, while moving to an ARM might lower your interest rate short-term. Your credit score and bank statements influence lender offers here.

Interest-only payments

Some lenders offer interest-only jumbo loans, cutting monthly costs temporarily. This can ease your debt-to-income ratio but requires planning for principal payments later.

No-closing-cost refinance

A no-closing-cost refinance rolls fees into your jumbo loan or adjusts your interest rate, minimizing upfront costs. Better.com makes this option accessible for jumbo mortgage holders.

Additional factors in jumbo mortgage refinancing

Before you refinance a jumbo loan, consider your loan-to-value ratio. If it’s high (e.g., above 80%), lenders may require private mortgage insurance (PMI), increasing costs unless you maintain strong cash reserves. Your credit score also plays a pivotal role—scores below 700 may limit lender options or raise your interest rate.

The FHFA adjusts conforming loan limits annually, so monitor these changes. A jumbo mortgage today might qualify as a conforming loan tomorrow, easing your refinance process. Reviewing bank statements and building cash reserves can strengthen your application, showing lenders you’re low-risk.

Take control of your jumbo loan today

Refinancing a jumbo mortgage is a strategic move to optimize finances. Lower your interest rate, adjust your loan term, or access equity to reduce your debt-to-income ratio and meet long-term goals. With Better.com, you’ll navigate lender requirements—like credit score thresholds and cash reserves—with ease.

Ready to refinance your jumbo loan smarter?

....in as little as 3 minutes – no credit impact