Jumbo Loan: Take Up Space
If you’re a buyer with a larger budget looking for a more expensive home, you may need a home loan outside the conventional loan limits set by the Federal Housing Finance Agency (FHFA). Jumbo loans require lenders with experience navigating complex scenarios. They are available in both fixed and adjustable rate mortgage (ARM) options.
How to Get a Jumbo Loan
Borrowers often start by requesting a quote for their interest rate or beginning an application with a lender. We’ll go over your credit report, and we’ll talk about your finances and terms you likely pre-qualify for. Then we’ll figure out the potential value of the house you’re interested in purchasing with an appraisal.
Talk only gets us so far, so be prepared for paperwork. We will request documentation for the underwriting process to make sure the loan begins on a solid foundation.
We’re with you through each step, all the way to closing.
Jumbo Loan Requirements
These are some of the common requirements you may need to pre-qualify for a jumbo loan. If you have questions about these requirements, we’re here to help.
- Credit score requirements vary. In most cases, a credit score of 700 or higher qualifies. This may shift lower or higher based on other factors such as Debt-to-Income ratio and down payment amount.
- In the underwriting phase, you’ll need documentation of consistent income with a Debt-to-Income ratio at or below 43%. This ratio shows how much of your monthly income goes to paying your current debt.
- Along with income information, you need to share employment verification and history.
- For jumbo loans offered by the VA, you must be active duty, a veteran, or a spouse.
- Your down payment needs to be at least 10% of the purchase price, with some scenarios requiring down payments of up to 20%.
Jumbo Loan FAQs
Financing a home is an important investment. It’s ok to have questions. We’ve compiled answers to the frequently asked ones, but don’t hesitate to ask more.
The biggest difference between a jumbo loan and a conventional loan is the amount of money you can borrow. Jumbo loans allow you to borrow more money to purchase your dream home, while conventional loans have lower limits. Additionally, jumbo loans may have stricter qualification requirements because the loan amounts are higher.
You’ll want to consider how much you’ve been able to save for a down payment, the value of the house you want to buy, and how the down payment amount impacts your potential mortgage.
Jumbo loans typically require down payments of 20% or more.
In some cases, loans under $1.5 million have lower down payment requirements at 10%.
The conforming loan limit is the maximum amount of money that can be borrowed for a mortgage using a conventional loan. This limit varies by county and by state. In most counties, the conforming loan limit is $647,200 (2022). However, in high-cost areas like Alaska and Hawaii, the limit is much higher at $970,800.
If you’re looking for a home that’s outside of the conforming loan limits, you’ll need to apply for a jumbo loan.
When you close your jumbo loan to purchase a house, you’ll need to account for several costs, both upfront and those included in your ongoing monthly payment. These will be clearly outlined as your loan is processed and before you close.
Beyond your initial down payment, you’ll also pay closing costs, which cover expenses such as loan origination fees, an appraisal, title insurance, etc. These typically range from 2-3% of your total loan amount.
You can expect to pay slightly higher closing costs with a jumbo loan than you would with a conforming loan. This is because jumbo loans are more expensive for lenders to process and they need to recoup these costs.
If you’re interested in refinancing your jumbo loan, you’ll need to meet the same requirements that you did when you applied for the original jumbo loan. This includes having a good credit score and sufficient income. You’ll also need to have equity in your home. Equity is the portion of your home that you own outright.
If you’re looking to lower your monthly payments, you may be able to do so by refinancing into a jumbo loan with a lower interest rate. You may also be able to shorten the term of your loan, which will also lower your monthly payments. Keep in mind that if you refinance into a loan with a shorter term, you may end up paying more in interest over the life of the loan.
If you’re interested in jumbo loan refinancing, talk to our team about your options. We’ll be able to help you determine if refinancing is right for you.