Tacoma offers a unique blend of urban and suburban living, with the benefits of a bustling city and the peaceful ambiance of smaller communities. The job market is robust, thanks to various industries ranging from healthcare to technology. Plus, there are excellent schools, parks, and recreational activities that make Tacoma an ideal place for families.
Tacoma is a growing urban hub, but with home prices on the rise, many homebuyers find themselves needing more than a standard mortgage can offer. This is where jumbo loans come in. Today, we’ll break down everything you need to know about jumbo loans in Washington. From median home prices and conforming loan limits to the pros and cons of jumbo loans.
Why Tacoma is a Hotspot for Homebuyers:
Tacoma is an appealing city for many reasons. With its scenic views, vibrant culture, and proximity to Seattle, it’s no wonder why so many people are looking to plant roots here. The city has seen significant growth over the past few years, making it an attractive option for families, young professionals, and retirees alike.
Rising Median Home Prices
The median home price in Tacoma has been steadily increasing in recent years. As of 2025, the median home price in Tacoma is around $475,000, up about 3% year over year. This growth indicates a healthy real estate market but also means higher costs for potential homebuyers.
Understanding Jumbo Loans:
Understanding Jumbo Loans:Before you jump into the world of jumbo loans, it’s crucial to understand what they are and how they differ from conventional loans.
What is a Jumbo Loan?
A jumbo loan is a type of mortgage designed to finance properties that are too expensive for a basic conventional conforming loan. Essentially, it’s larger loan limits for more expensive properties.
The good news is the standard conforming loan limits in Pierce County are higher than the national average and currently $1,037,300 for a 1-unit property. With this, a standard conforming loan will be sufficient for the majority of home buyers based on the average home prices mentioned above.
However, buyers in more expensive neighborhoods like the Stadium District, Old Town, Point Ruston or Three Bridges may require Jumbo financing as many of these homes are priced at $1,000,000+
| PIERCE COUNTY CONFORMING LIMITS: | 1-unit $1,037,300 | 2-unit $1,327,950 | 3-unit $1,605,200 | 4-unit $1,994,850 |
Advantages of Jumbo Loans:
Opting for a jumbo loan comes with several benefits. Understanding these can help you decide if it’s the right choice for your home financing needs.
Higher Loan Amounts
The most obvious advantage is the ability to borrow a larger sum of money. This allows you to purchase high-value properties that would otherwise be out of reach. Whether you’re eyeing a luxurious home in a prime location or a sprawling estate, a jumbo loan can make it possible. The jumbo loan limits will depend primarily on the borrowers credit profile and down payment, as highlighted below.
5% Down Jumbo: $1,700,000
10% Down Jumbo: $3,000,000
15% Down Jumbo: $3,500,000
20% Down Jumbo: $4,000,000
Competitive Interest Rates
Contrary to what you might think, jumbo loans often come with competitive interest rates. Lenders are willing to offer favorable terms to attract high-quality borrowers. With good credit and a substantial down payment, you can secure a jumbo loan with interest rates that rival conventional loans.
Flexibility in Property Types
Jumbo loans aren’t restricted to single-family homes. You can use them to finance a variety of property types, including multi-family residences, vacation homes, and investment properties. This flexibility makes jumbo loans an excellent option for those looking to diversify their real estate portfolio.
Combo Loan Options
Combo piggyback loan options are often utilized so buyers can avoid monthly mortgage insurance. 80/10/10 and 80/15/5 are popular options where the first mortgage covers 80% of the property value, a second loan covers another percentage (typically 10 or 15%), and the remaining balance is covered by a down payment. This is a popular option for buyers putting down less than 20%. These types of loans can save buyers hundreds on their monthly payments compared to traditional single loan options.
Disadvantages of Jumbo Loans:
Disadvantages of Jumbo Loans:While jumbo loans offer many advantages, they also come with certain drawbacks that potential borrowers should consider.
Stricter Qualification Requirements
Qualifying for a jumbo loan is more stringent compared to conventional loans. Lenders and banks often require higher credit scores, usually above 680, and a lower debt-to-income (DTI) ratio. You’ll also need to provide extensive documentation to prove your financial stability. Please see the Jumbo Purchase page for a breakdown on qualifying requirements.
Higher Down Payment
Jumbo loans typically require a larger down payment, when compared to conventional loans. Although, new options have recently emerged that permit up to 95% financing for eligible buyers.
Payment Reserves
Jumbo loans will require mortgage payment reserves. Payment reserves is an emergency fund for borrowers to access, if they experience something unforeseen like a job lose, etc. This shows the lender that you have enough cash flow to continue making payments in case of any unforeseen circumstances. In most cases, buyers should have 3–9 months of reserves in a liquid or non-liquid account.
How to Qualify for a Jumbo Mortgage in Tacoma
How to Qualify for a Jumbo Mortgage in TacomaGetting approved for a jumbo loan involves meeting several criteria. Here’s what you need to know to improve your chances of approval.
Maintain a High Credit Score
A high credit score is crucial for securing a jumbo loan. Aim for a score of 700 or higher. If your score is lower, take steps to improve it before applying. Keep in mind, even a small increase in your credit score can help you secure a lower interest rate. Pay off debts where possible, limit new credit inquiries, and keep your credit utilization low.
Lower Your Debt-to-Income Ratio
Your debt-to-income (DTI) ratio should be below 45%, though some lenders prefer it to be even lower. Reduce your existing debt and avoid taking on new debts before applying for a jumbo loan. This will make you a more attractive borrower.
What to Expect During the Application Process:
Applying for a jumbo loan is more complex than a conventional loan. Here’s a rundown of what you can expect.
Documentation
Be prepared to provide extensive documentation, including two years of tax returns, W-2s, bank statements, and proof of assets. Lenders will scrutinize your financial history to ensure you’re a low-risk borrower.
Appraisal and Inspection
An appraisal and inspection will be required to determine the property’s value. This helps the lender assess the risk and ensures you’re not overpaying for the home.
Underwriting Process
The underwriting process for jumbo loans is more detailed when compared to conventional loans. It involves a thorough review of your financial documents and the property’s appraisal. This process can take longer than conventional loans, so be patient.
Remember, while jumbo loans offer the opportunity to finance high-value properties, they also come with stricter qualification requirements. By maintaining a high credit score, lowering your debt-to-income ratio, and saving for a substantial down payment, you can increase your chances of securing an approval.
Ready to explore your jumbo loan options in Tacoma? Contact us 7 days a week to learn more about all the purchase and refinance options by calling or just submit the Quick Contact Form.
