A jumbo loan is a mortgage that is larger than the loan-servicing limits set by the Federal Housing Finance Agency (FHFA). If you know you need a large loan to cover a higher home mortgage loan, you might be wondering how to qualify for a jumbo loan.
Key Points
• Jumbo loans are available for properties valued over $832,750, with higher limits in high-cost geographical areas.
• A credit score of 700 or higher is typically required for consumers to qualify for a jumbo loan.
• Down payments can be as low as 10%, but a higher amount can improve loan terms.
• A debt-to-income ratio below 43% is required for qualifying for a jumbo loan.
• Lenders often require up to 12 months of cash reserves to ensure financial stability.
Jumbo loan qualifications are more stringent than conforming conventional loans. Because a jumbo loan is a nonconforming loan, banks take on more risk as they are not able to sell the loan to government-sponsored enterprises Fannie Mae and Freddie Mac. Since the loans are not guaranteed by the government, lenders are more cautious about the type of borrowers they do business with.
What this means for your money: You need conditions to be pretty optimal to qualify for a jumbo loan. But it can be done. Learn more here, including:
• How to qualify for a jumbo loan
• What factors lenders consider when authorizing jumbo loans
• The jumbo loan qualification process
• How to decide if a jumbo loan is right for you
Jumbo Mortgage Requirements
The current limits for jumbo loans are defined as exceeding $832,750 for single-family homes, except in Alaska, Hawaii, and some federally designated markets that are considered high-cost. In those areas, the limit that’s exceeded is $1,249,125 since these locations tend to have pricier housing markets.
Jumbo mortgage requirements are similar to conventional conforming loan requirements, but there are some key differences that make them harder to qualify for.
A High Credit Score
Experts recommend a credit score of 700 or above for jumbo loan borrowers. A higher credit score when buying a house is indicative of a borrower’s behavior with credit and how likely they are to repay the loan. A higher credit score is needed for the higher loan amounts of a jumbo loan. That lofty score can help the lender feel more secure that you’ll pay back the amount you borrow.
Cash Reserves
A cash reserve is how much liquid money you have at your disposal. What counts as liquid money can vary from lender to lender. For example, some will allow a percentage of vested 401(k) funds to count toward the reserve requirement. Others do not.
Because jumbo loans are so large, lenders look for cash reserves in your account to guard against default. For the best jumbo loan terms, lenders can require as much as 12 months of reserves.
A Low Debt-to-Income Ratio
A debt-to-income ratio is the amount of income you make relative to the amount of debt obligations you have. If you have what is considered too much debt, the lender will not offer a loan to you. With jumbo loans, a healthy DTI ratio is essential to qualify for the mortgage. A DTI ratio below 43% is recommended.
What Does the Jumbo Qualification Process Include?
When you’re looking at jumbo loan requirements and the qualification process, there are some things you should keep in mind. Here, what’s needed to get a mortgage:
Documents Required for Jumbo Loan
When you apply for a jumbo loan, the lender will look to verify the information you provided. Some documents you may be required to provide include:
• Two years of tax returns
• Profit & Loss (P&L) statement if you’re a business owner
• Pay stubs
• Bank statements
• Documentation for other income
Loan-to-Value Ratio Evaluation
In addition to your application, the jumbo loan will require an appraisal of your property to ensure they’re not lending too much on the home (that is, more than it’s worth). This appraisal will ensure the home’s price is not too high and determine that the loan-to-value ratio (LTV) is within its guidelines.
Evaluating How Jumbo Down Payments Will Impact You
How much you put down on the home of your dreams will impact what loan you qualify for. If you’re able to put down enough, you may be able to forgo the jumbo loan requirements and get into a conforming conventional loan.
Is a Jumbo Mortgage Right for You? Questions To Ask
When it comes to making a decision on a jumbo loan, it’s helpful to ask yourself some questions that can help determine if a jumbo loan will work for you.
Do I Have Good Credit?
Ask yourself if your credit is strong enough to qualify for a jumbo loan. These mortgages do come with higher loan amounts and higher payments, and a good credit score range (700 or higher, typically) can help you get the best terms possible to qualify for a jumbo loan.
Do I Have a Low DTI and High Cash Reserves?
It’s important to have a low debt-to-income ratio and ample reserves to qualify for a jumbo mortgage, as discussed above. While some lenders may go up to as high as a 43% DTI, others will want to see a lower number.
Can I Prove I’m in Good Financial Health?
Qualifying for a jumbo mortgage goes beyond the numbers. Can you demonstrate to the lender that you’re able to continue making payments? Do you have a consistent job history? Are all the other financial factors in your life lined up so you can afford the mortgage?
Is the Property Value High Enough for a Jumbo Loan?
The jumbo loan value minimum (and conforming loan limits) is $832,750 for most areas in the U.S. If your mortgage is below this amount, you’ll want to look at financing with a conforming conventional loan instead. In high-cost areas, the home would have to hold a value of more than $1,249,125.
Do I Have Enough Money Saved?
A down payment on a property that merits a jumbo loan will often be a significant amount of cash. And while some closing costs are a flat fee that won’t go up, many are labor-intensive or percentage-based (2% to 5% of the loan amount), so your jumbo loan closing costs are larger than for a conventional, conforming loan.
If you are in the market for a high-value home, a jumbo mortgage can help you make it your own. However, you will need to meet the loan requirements, which may be somewhat more demanding than those for a conforming loan. By focusing on optimizing your credentials and financial profile, you can work to secure the mortgage that makes your home-ownership dreams come true.
When you’re ready to take the next step, consider what SoFi home loans have to offer. Jumbo loans are offered with competitive interest rates, with no PMI, and down payments as low as 10%.
SoFi Mortgage Loans: We make the home loan process smart and simple.
FAQ
Is it harder to qualify for a jumbo loan?
Yes, jumbo loans are harder to qualify for. You will need a larger down payment than you would with a conforming loan, a higher credit score, a low debt-to-income ratio, more cash reserves, and a tighter loan-to-value ratio.
What credit score do you need for a jumbo loan?
For a jumbo loan, you may want to aim for a credit score above 700.
Do jumbo loans require a 20% down payment?
Sometimes they do. But it is possible to obtain a jumbo loan with a down payment as low as 10% or possibly even lower.
Photo credit: iStock/lovenimo
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Many people hit a period of financial hardship at some point in their lives. Maybe there’s a medical emergency and big bills, a job layoff, or a family member in serious need: These and other scenarios can put your money management in a precarious position.
Approximately 73% of Americans report feeling stressed about money, according to an April 2025 CNBC/SurveyMonkey poll. Financial stress can be triggered by anything from the high cost of living to excess debt to worrying about saving for one’s (and one’s family’s) future.
Here, you’ll learn more about what happens when financial hardship hits and how to take steps to improve the situation, from applying for assistance to negotiating with lenders to discovering new sources of income.
Key Points
• Financial hardship can be temporary or long-term, and often requires tailored strategies to address.
• Creating a budget and cutting nonessential expenses can help manage financial difficulties.
• Consolidating debt with a personal loan can simplify and potentially reduce the total interest paid.
• Turning hobbies into side hustles can provide additional income to support financial recovery.
• Contacting lenders and service providers for assistance can help prevent further financial strain.
What is Financial Hardship?
Everyone probably has their own definition of “economic hardship” that’s based on their own needs and wants. And the federal government has its own criteria for what counts as a “hardship” when it comes to taking an individual retirement account (IRA) distribution, looking for tax relief, or requesting a student loan deferment.
But generally, a financial hardship is when an individual or family finds they can no longer keep up with their bills or pay for the basic things they need to get by, such as food, shelter, clothing and medical care.
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Warning Signs
Sometimes financial difficulties can sneak up on a person, and catch them completely off guard. Other times, the warning signs have been there for a while, but were missed or ignored.
Identifying the root cause of financial distress can help give you a head start on working through your money issues. What follows are some red flags that may signal you are headed for financial difficulty or hardship.
Having Credit Card Balances at or Above the Credit Limit
While using credit cards may seem like a good way to get around a short-term lack of funds, the practice could lead to extra fees and negatively impact your credit. The percentage of available credit someone is using — known as a credit utilization ratio — can indicate to lenders how heavily they’re depending on credit cards to get by. And because it’s one of the major factors in determining a person’s overall credit score, financial advisors typically recommend keeping card balances at or below 30% of the limit.
Juggling Which Bills Get Paid Each Month
It may be tempting to skip a payment from time to time, hoping to catch up eventually — but there can be short- and long-term consequences for juggling bills. Insurance coverage may be lost. There may be a late fee, or a bill could be turned over to a collection agency.
Utilities can also be shut off, and a deposit might be required to restart the account. Making late payments on a credit card could lead to a higher interest rate on the account. And late payments and defaults can hurt credit scores.
It may be necessary to make minimum payments if times are especially tight, and there likely won’t be any short-term harm. But even if you stop making purchases, just the interest charged will keep the account balance growing, possibly extending the amount of time it takes to pay down that debt by months or years.
Often Paying Late Fees or Overdraft Fees
A one-time mistake may serve as an annoying reminder to be more cautious with money management, but if late fees, overdraft and non-sufficient funds fees, and overdraft protection transfers become a regular thing, they can add another layer of worry to your financial burden. (Using alerts, automatic payments, and apps from your financial institution may offer a more effective method to track bills as well as deposits and withdrawals.)
💡 Quick Tip: Make money easy. Open a bank account online so you can manage bills, deposits, transfers — all from one convenient app.
Having a High Debt-to-Income Ratio
Lenders often use a person’s debt-to-income ratio — a personal finance measure that compares the amount of debt you have to your income — to determine if a borrower might have trouble making payments. If a person’s debt-to-income ratio is high, it could make it more difficult to borrow money, or to get a good interest rate on a loan.
Tapping Retirement Savings to Pay Monthly Bills
In certain cases, the IRS will allow an account holder to withdraw funds from a 401(k) or IRA to cover an immediate and heavy financial need (such as medical expenses, payment to avoid eviction or repair home damage) without paying the 10% early withdrawal penalty. But taxes will still have to be paid on those distributions. And taking that money now, instead of letting it grow through the power of compound interest, could have serious repercussions for the future.
Dealing with Financial Hardship
For those who’ve been struggling for a while, or who’ve had a sudden but substantial financial loss, it might feel as though you’ll never recover. But there are several options you might consider taking to get back on track. Some you can do for yourself, while others might require getting financial hardship help from others. And while some might be temporary, others take a longer view. Here are a few:
Reducing Monthly Spending
Creating a monthly budget can help guide your spending decisions and make the most of the money you have. This may involve prioritizing your monthly expenses, starting with the essentials and going down to the “nice to haves.” Once you’ve established which expenses are the most important, you can then look for places to cut back or things to cut out of your budget altogether. Cutbacks may not feel fun, but they can help jump-start your recovery.
For example, could you cut costs if you cooked meals yourself more often? Are you trying too hard to keep up with what friends and family are spending on clothes, vacations, and cars? Are there monthly bills that could be reduced? (For example, you might be able to save money on streaming services, internet, and phone services; manicures and other beauty treatments; or even rent, insurance, or car payments.) It may help to start by tracking expenses for a month or so to get an idea of where money is going, and then sit down and map out a more realistic path for the future.
Creating a Debt Reduction Plan
Along with a budget, it also may be useful to come up with a plan for paying down credit card balances, student loans, and other debt. It’s important to always make the minimum payment on all these bills, if possible, but a personal debt reduction plan could help with prioritizing which bill any leftover money might go toward after all the household expenses are paid each month — or the money might come from a tax refund, bonus check from work, or a gift. Knocking down debts that include high amounts of interest can eventually free up more cash to put toward short- or long-term savings goals.
💡 Quick Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.
Looking for Ways to Earn Extra Income
Is there a way to turn a hobby, skill, or interest into some extra funds? Maybe a favorite local business could use some part-time help. Or, if a second job is out of the question, perhaps a side hustle with flexible hours is a possibility. Writers, artists, and designers, for example, may be able to turn their talents into a side business. Babysitting the neighbor’s kids or running errands for an older person are also options. And, of course, on-demand services like Uber and DoorDash are employing drivers, delivery persons, and other workers.
Considering a Loan to Consolidate Bills
Getting a personal loan for debt consolidation won’t make money problems go away completely — but it might make managing payments a little simpler. With just one monthly payment (instead of separate bills for every credit card or loan) it can be easier to keep tabs on how much is owed and when it’s due.
Because interest rates for personal loans are typically lower than the interest rates credit card companies offer (especially if a rate went up because of late payments), the payoff process for that debt could go faster and end up costing less. (Generally, lenders offer a lower interest rate to those who have a higher credit score; borrowers who are already behind on their bills may pay a higher interest rate or have more trouble getting a loan.)
Student loan borrowers also may want to look into consolidating and refinancing with a private lender to get one manageable payment and, possibly, save money on interest with a shorter term or a lower interest rate. Refinancing may be a solution for working graduates who have high-interest, unsubsidized Direct Loans, Graduate PLUS loans, and/or private loans.
Just keep in mind: Federal loans carry some special benefits that private loans don’t offer, including public service forgiveness and economic hardship programs, so it’s important for borrowers to be clear on what they’re getting and what they might lose if they refinance.
Notifying and Negotiating
Ignoring credit card payments and other debts won’t make them disappear. Borrowers who can clearly see they’re headed for financial trouble may wish to notify their credit card company or lender and try to work out a more manageable payment arrangement. (There are debt settlement companies that will do the negotiating, but they charge a fee for their services.)
A credit card issuer may agree to a reduced, lump-sum payment or a repayment plan based on the borrower’s current income, or it may offer a hardship program with a lower interest rate, lower minimum payments, and/or reduced penalties and fees. The options available could depend on why a customer fell behind, or if they’ve had problems before.
Financial hardship assistance is sometimes offered by mortgage lenders. Because these lenders generally don’t want their borrowers to foreclose on their homes, it’s in their best interest to work with borrowers when they get in trouble. The lender may be willing to help the borrower get caught up by forgiving late payments, or they may change the interest rate of the loan or lower the payment.
If you have federal student loans and are experiencing financial hardship, you might qualify for a special repayment plan, such as pay-as-you-earn, or an income-based repayment plan.
It can also be helpful to reach out to service providers (such as water, electricity, internet) and let them know you are experiencing financial difficulties. Providers may be willing to work with you and you may be able to come to an agreement well before any shut-off actions go into effect. This can also save you from late fees, or going into collections.
Getting Financial Help
There are also a number of government programs designed specifically to help people overcome sudden financial hardships. Those who’ve lost a job may be entitled to unemployment benefits. If that job provided health insurance, you may want to look into COBRA to see if you can maintain affordable health insurance. Those who were injured at work may be entitled to workers’ compensation.
Also, some people facing financial hardship may qualify for state or federal benefits like Medicaid or Social Security Disability.
Though not free, a financial professional who specializes in planning, saving, and investing may be a worthwhile investment. They may be able to offer a fresh perspective and help create a path to financial freedom. There may also be free or low-cost debt counselors available via non-profit organizations.
Preparing for Current and Future Challenges
Once you’ve developed your personal plan for overcoming financial hardship, you can begin working on your goals of becoming more financially independent. If the cause of your hardship is temporary (you were out of work but quickly found a new job, for example), it may take just a few months to get back on your feet. If the problems are more difficult to overcome (you’ve lost income through a divorce, or you or a loved one has an ongoing medical condition that requires expensive treatment), the timeline could be much longer. Once you’ve put your plan in place, you may want to review it on a regular basis, and perhaps do some fine-tuning.
The Takeaway
Many people go through periods of financial hardship, and often for reasons that are beyond their control. But that doesn’t mean they are out of options. There are many simple and effective steps you can take. Cutting monthly expenses, consolidating debt, and getting outside assistance are moves that can help you get back on the right financial track.
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Staying motivated to save money can involve simple habits like building a better budget and automating your finances. If you find your focus on setting aside cash is losing steam, these and other easy moves can help you boost your financial reserves without feeling too much of a pinch.
Whether you’re saving to realize the dream of booking a beach house next summer or putting away enough for your baby’s future education, you’ll see that there’s no mystery to being a smarter saver.
Key Points
• To stay motivated to save money, identify and pursue financial and personal goals that enhance security and peace of mind.
• Track and categorize all expenses to build a motivating budget and maximize savings.
• Automate savings through recurring transfers to a dedicated account.
• Reevaluate financial plans regularly, such as at the start of each year.
• Use technology and financial apps to visually track and monitor savings progress.
1. Finding the “Why”
Saving just to save may not be enough for some to stay motivated. Instead, it could be helpful to figure out your own personal “why.” Why are you saving, what are you saving for, and how long do you need to save to get it?
It can be easy to start saving and lose motivation when life gets in the way: The bills stack up, emergencies happen, the car won’t start, and on and on and on. However, if a person has a reason for saving, or a money goal, in the back of their mind it may be easier to stay the course.
By the way, a person’s savings motivation can be for literally anything their heart desires. Sure, it can be to save for retirement, to buy a house, or to start a family, but it can also be to go on vacation, renovate the kitchen, buy the latest mobile device, or to just have enough in the bank so they can have peace of mind. Make it whatever you want.
When finding money motivation, it can be useful to try to think about financial priorities. A person needs to pay for food, shelter, and clothing, but do they need to have a new phone? Or a new car? A new designer watch or the latest gadget? Before setting a budget and starting a new savings journey, it’s important to think about personal priorities.
2. Building a Budget
To help clarify savings goals, try building a personal budget around the priorities mentioned above. A personal budget makes a great road map for the future and can help keep you motivated to save because you know exactly where your money is going, and how it can help you get the things you want.
• To create a budget, first, start tracking all personal spending. To do so, gather all account information and sift through a few month’s worth of expenses. Don’t forget about commonly forgotten expenses, such as birthday gifts for friends and family or insurance premiums.
• Next, determine how to categorize expenses. Getting too granular can make it challenging to track. Consider keeping it generic with categories like “groceries,” “shopping,” “entertainment,” “health,” “home,” “bills,” “medical,” “car payment,” etc. Try to make sure every dollar spent has a home somewhere.
• Then, plot out the next few months of anticipated expenses and see how much cash is left over. This can go into some type of savings account, such as a high-yield savings account.
• If you want to save more, you can take a critical eye to your purchases and see where you can cut back on spending. For example, not using that gym membership? Cut it. Every little bit can help.
You can experiment with different budgeting methods. One popular one is the 50/30/20 budget rule, in which you allocate 50% of your after-tax pay to needs, 30% to wants, and 20% to savings and/or additional debt payments.
Once your priorities are in focus and your budget is set, it’s time to actually start saving. Yes, it can be thrilling to drop a whole heap of cash into a savings account, but the thrill can wear off after a while. Instead, try saving little by little. This way, you won’t feel the pinch and it won’t feel like you are missing out on the fun stuff just to save for a hypothetical future.
One strategy is to automate your finances and set up recurring transfers, so that money is saved without much effort. This can help a savings account add up without feeling like an effort, which could have major effects on your motivation.
4. Try Walking Away From Impulse Spending
There are a lot of spending triggers in this world. Sales, pretty items, shiny objects, nights out, the list goes on and on. Sometimes, the best thing people can do is walk away before purchasing or saying “yes.” Take a night out with friends as one example. Before immediately responding “Sure,” you could say, “Can I get back to you?” and then really think about whether you really want to attend or if it’s just a habit. Set an alarm for 30 minutes, and decide when the timer is up. Allowing yourself a minute to step back, can help you be intentional with your spending.
For bigger purchases, people can try the 30-day rule. It’s a financial strategy that can help people regain control over impulse shopping. Basically, if you see something you want to buy but don’t necessarily need, you just stop and walk away. Not just for a minute, but for a full 30 days.
Next, write down the item you want to buy and where you can find it, along with the price. Put it away and set a calendar reminder 30 days from that date.
At the end of that timeframe, if you really still want the item, you could return and purchase it. However, after a month has passed, you may no longer feel the urge to buy or may have forgotten the item altogether. As a bonus, if you get to the end of the 30-day block and decide you no longer need the item, you could put the amount you didn’t spend into a savings account to use the money toward your priority list instead.
5. Setting Short-Term Savings Goals
Saving for long-term goals, like retirement, is important, but don’t overlook the small stuff. Setting a savings goal can help people know there is an end in sight.
One place to start is establishing an emergency fund. Having an emergency fund can provide stability should you run into, well, an emergency.
Other shorter-term goals might include things like new furniture, a vacation, or a renovation. Having these smaller goals can make saving for something as grandiose as retirement seem less intimidating.
Whatever it is, find a number and stick to it. Then, once you hit that goal, you can set another and start the entire process over again.
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6. Remembering to Reevaluate Every Now and Then
After setting a priority, budget, and goal, it’s important to also set reminders to reevaluate those markers from time to time too. One way to do this could be making it a New Year’s resolution to look at money goals and see if they are still in line with your personal goals.
Life changes and finances may need to change with it. It’s okay to reallocate the money already saved and put it in a new bucket.
Perhaps you began saving for a vacation but had a baby along the way and want to start saving for their college education instead. Or maybe someone switched jobs within the last year and is making more money now. They can readjust their budgets and savings plans to fit their new financial outlook. The same goes for those who may have lost work too. Reevaluating, reprioritizing, and reallocating can help make financial change more manageable.
7. Telling Others About Savings Goals
Sometimes, the best thing one can do to stay motivated is to let others know about their plans. You can let your inner circle in on your savings goals and priorities and ask those trusted few to help you stay on track.
By letting people in on plans, you can also avoid any tricky situations, like having to say “no” to events, parties, or nights out because people already know you are trying to save. The inner circle could also help keep you on the straight and narrow when it comes to wants vs. needs and help to keep financial goals in sight.
Being able to see your savings grow is perhaps the best money motivator out there. There are a number of financial apps that can help you see your finances all in one place. Some even offer visual representations, such as bar charts and graphs, so you can see just how much your savings have grown over time. That can be very motivating!
The Takeaway
It can be easy to lose motivation when saving money, but with a little effort, you can adopt new habits to help you through. Those might include building or tweaking a budget, trying the 30-day rule, setting short-term goals, and sharing your financial goals with a few trusted friends or relatives. Using the tech tools your financial institution provides to see your money grow may also be a valuable boost.
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FAQ
How can I motivate myself to save money?
Some ways to motivate yourself to save money include budgeting wisely, setting clear savings goals, tracking your spending, and automating your savings. Talking about your savings plan with trusted friends and relatives can be a wise move, too, along with giving yourself regular small rewards.
What is the 30-day rule to save money?
The 30-day rule says that, before making a significant impulse purchase, write down the item and the location in your calendar for 30 days in the future and then walk away. If, after 30 days you still want the item and can afford it, go ahead and buy it. If that “gotta have it” feeling has passed, you’ve avoided an impulse buy.
What is the basic motivation for saving?
Saving money is motivated by the desire to achieve financial and personal goals and have security. For example, you might want to save for an emergency fund, or you might be accumulating money for the down payment on a house or your child’s educational expenses.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Understanding Nasdaq listing rules and how a stock exchange works can be helpful when mapping out an investing strategy and determining which stocks to purchase. As such, before a stock can be traded by investors, it must first be listed on an exchange. Different stock exchanges can have physical locations with in-person trading or be entirely electronic.
After the New York Stock Exchange (NYSE), the Nasdaq is the second-largest stock exchange in the world. Not just any company can be listed for trading on the Nasdaq, however. There are specific Nasdaq listing requirements that must be met as a condition of inclusion. These rules are designed to ensure that only reputable companies can trade on the exchange.
Key Points
• Nasdaq mandates precise financial standards, including market capitalization, earnings, cash flow, and revenue.
• A minimum share price of $4 is required for companies listed on Nasdaq; those with a lower price may qualify if certain requirements are met.
• Companies must adhere to ongoing standards to avoid delisting from Nasdaq.
• Corporate governance rules are strictly enforced for all Nasdaq-listed companies.
• Listing fees on Nasdaq vary based on company specifics.
What Is the Nasdaq?
The Nasdaq plays an important role in the history of the stock market. It’s an electronic stock exchange founded in 1971 by the National Association of Securities Dealers. Nasdaq is an acronym for National Association of Securities Dealers Automatic Quotations.
In terms of how many companies are on Nasdaq, the exchange lists approximately 3,300 common stocks, as of April 2025. Those stocks represent a diverse range of industries, including financial services, health care, retail, and tech stocks.
In addition to identifying the stock exchange itself, the term “Nasdaq” can also be used as shorthand when referencing the Nasdaq Composite Index. This stock market index tracks the performance of approximately 2,500 stocks listed on the Nasdaq exchange, as of April 2025.
The Nasdaq Composite is a capitalization-weighted index, meaning its makeup is determined by market capitalization. Market cap is a measure of a company’s value as determined by its share price multiplied by the total number of outstanding shares. The Nasdaq Composite includes some of the largest U.S. companies by market cap.
Nasdaq Listing Requirements
The Nasdaq doesn’t include every publicly traded company in the U.S. In order to be included on the exchange, companies must first meet Nasdaq listing rules. These rules apply to companies that are seeking to have common stocks on the exchange.
Nasdaq listing requirements span a number of criteria:
• Earnings
• Cash flow
• Market capitalization
• Revenue
• Total assets
• Stockholders’ equity
• Bid price
The Nasdaq listing rules allow companies to qualify under one of four sets of standards, based on the criteria listed above.
Standard 1: Earnings
A company’s earnings are a reflection of its profitability. To qualify for listing on the Nasdaq based on earnings alone, a company must be able to show:
• Aggregate pre-tax earnings of $11 million or more for the three prior fiscal years
• Earnings of $2.2 million or more for the two most recent fiscal years
• Zero net losses for each of the three prior fiscal years
For a company to be included under this standard, they have to be able to check off all three of these boxes. If they can meet two criteria but not a third, they won’t be able to qualify for listing.
Standard 2: Capitalization with Cash Flow
Capitalization is a measure of a company’s size in relation to the rest of the market. Cash flow tracks the movement of cash in and out of a company. To qualify for Nasdaq listing under the capitalization with cash flow standard, the following rules apply:
• Aggregate cash flow of $27.5 million or more in the prior three fiscal years
• Zero negative cash flow for the prior three fiscal years
• Average market capitalization of $550 million or more over the prior 12 months
• Revenue of $110 million or more for the previous fiscal year
Again, all four of those conditions have to be met to qualify for Nasdaq listing using this standard.
Standard 3: Capitalization with Revenue
The third Nasdaq listing standard focuses on company size and revenue, which is a measure of income. The minimum requirements for both are as follows:
• Average market capitalization of $850 million or more over the prior 12 months
• Revenue of $90 million or more for the previous fiscal year
Larger companies may opt to take this route if they can’t meet the cash flow requirements under Standard 2.
Standard 4: Assets with Equity
In lieu of earnings or market capitalization, companies can use their assets and the value of shareholders’ equity to qualify for listing on the Nasdaq. There are three specific thresholds companies have to meet:
• Market capitalization of $160 million
• Total assets of $80 million
• Stockholders’ equity of $55 million
Regardless of which standard a company uses to qualify for listing, they have to maintain them continually. Otherwise, the company could be delisted from the Nasdaq exchange.
General Nasdaq Listing Rules
Aside from meeting the listing requirements set forth for each standard, there are some general Nasdaq listing requirements companies have to observe.
For example, the Nasdaq minimum share price or bid price for inclusion is $4. It’s possible to qualify with a bid price below that amount but that may entail meeting additional requirements.
Companies must also have at least 1.25 million publicly traded shares outstanding. That threshold applies to both seasoned companies and those seeking their initial public offering (IPO). Additionally, IPO requirements specify that the market value of those shares must be at least $45 million. For seasoned companies, the market value requirement increases to $110 million.
Nasdaq listing rules also cover criteria related to corporate governance. Under those requirements, companies must:
• Make annual and interim reports available to shareholders
• Have a majority of independent directors on the board of directors
• Adopt a code of conduct that applies to all employees
• Hold annual meetings of shareholders
• Avoid potential or actual conflicts of interest
Companies must also pay a listing fee to gain entry to the Nasdaq. Entry fees can range from $150,000 to $295,000, depending on the total number of shares outstanding. Those amounts include a non-refundable $25,000 application fee. Paying the fee doesn’t guarantee that a company will be listed on the Nasdaq.
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How to Choose NASDAQ Stocks
Knowing how stocks are chosen for the Nasdaq and other exchanges can be helpful in conducting your own research when deciding what to buy or sell. Listing on the Nasdaq or NYSE can also be important for a company in terms of which exchange-traded fund it gets added into. Broadly speaking, there are two ways to approach stock research: technical analysis and fundamental analysis.
Technical analysis focuses on market trends, momentum, and day-to-day movements in stock pricing. You may use a technical analysis approach for choosing stocks if you’re an active day trader who’s interested in capitalizing on market trends to make short-term gains.
Using fundamental analysis on stocks, on the other hand, focuses on a company’s financial health. That includes things like earnings, profitability, and how much debt the company has. Using a fundamental approach may be preferable if you favor a long-term, buy-and-hold strategy. And fundamental analysis echoes how the Nasdaq and other stock exchanges determine which stocks to include.
The Takeaway
Becoming a savvy investor starts with learning the basics of how the stock market and stock exchanges such as the Nasdaq work. Understanding Nasdaq listing requirements can offer insight into how stock exchanges select which companies to offer for trading.
While the Nasdaq doesn’t include every publicly traded company in the U.S., as noted, there are guidelines and rules that companies that are listed, or wish to be listed, must abide by.
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About the author
Rebecca Lake
Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.
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