Jumbo Loan

Jumbo Loan

You may need a mortgage to finance the purchase when you buy a new property. A jumbo mortgage can provide you the larger funds traditional loans do not cover — given that you
can find a lender that offers one, satisfy the requirements, and afford the higher cost.

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What Is a Jumbo Loan?

A jumbo loan, also known as a jumbo mortgage, is a type of financing that surpasses the Federal Housing Finance Agency (FHFA) set. Unlike conventional mortgages, a jumbo loan cannot be purchased, guaranteed, or securitized. Jumbo mortgages are designed to finance luxury properties and homes in highly competitive local real estate markets and have unique underwriting requirements and tax implications. These mortgages have gained traction as the housing market recovered following the Great Recession.

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First-Time Homebuyer
Interest Rates
Hard To Qualify For
Buying A Modest Home
Super High Loan Minimum

First-Time Homebuyer

Myth

You cannot get a jumbo loan as a first-time homebuyer.

Fact

But this is not the case. Even if you are buying your first home, you can apply for a jumbo loan. And you may be successful depending on your credentials.

Interest Rates

Myth

You will pay a higher interest rate on a jumbo loan.

Fact

The truth is that interest rates can vary depending on each individual borrower(s) profile, such as Credit History, Credit Scores, Property Type, LTV, & etc. So, for your financial safety, you should speak to your lender specifically about your profile and then shop around when looking for your best possible mortgage deal.

Hard To Qualify For

Myth

Jumbo loans are hard to qualify for.

Fact

Jumbo loans are a bit more difficult to qualify for but not by very much as a credit score of 720 is fairly easy to achieve.

Buying A Modest Home

Myth

You do not need a jumbo loan if you are not buying a mansion.

Fact

It is not uncommon for regular homes to require more financing to buy than you can obtain through the use of a conforming mortgage.

Super High Loan Minimum

Myth

Jumbo loans require a super high loan minimum.

Fact

Jumbo loans don’t start at $1 million dollars. Instead, the minimum amount for a jumbo loan is anything above the conforming loan limit, which for 2024 is $766,550.

Qualifying for a Jumbo Loan

Underwriting criteria for jumbo loans are stricter because the loans are more extensive and riskier for lenders.

  • Credit score: Lenders may need your FICO score to be higher than 700, sometimes as high as 720, to be eligible for a jumbo loan.
  • Debt-to-income ratio: Lenders will also assess your debt-to-income ratio (DTI) to guarantee you don’t become over-leveraged. However, they may be more flexible if you have ample cash reserves. Some lenders have a hard cap of 45% DTI, however.
  • Documentation: To verify your financial health, you’ll need extensive documentation, possibly more than a conforming loan. It would help if you were ready to provide your complete tax returns, W-2s, and 1099s when applying, in addition to bank statements and details on any investment accounts.
  • Cash reserves: You’re more likely to qualify for a jumbo loan if you have enough money in your bank account. Lenders usually ask jumbo loan borrowers to show they have enough cash reserves to provide one year of mortgage payments.
  • Appraisals: Some lenders may mandate a second home appraisal for the property you plan to buy.

Why Use a Jumbo Loan?

If you want to buy a more expensive house than usual, a jumbo loan can help you get the financing you require. Jumbo loans aren’t just used to buy a primary residence; this type of loan is also popular for investment properties and vacation homes.

“Housing is a great investment. In general, the people getting jumbo loans are the most creditworthy, and the money being leveraged is being put back into their businesses,” says John Lynch, the CEO of PCMA.

Edge Home Finance Corporation

We bring a customized, unique approach to mortgages. Our lending solutions use the perfect hybrid of human-driven insights and technical prowess to process loans faster and significantly reduce costs.

PHONE

(214) 801-0296

E-MAIL

wade.hill@edgehomefinance.com

ADDRESS

5868 Baker Road
Minnetonka, MN 55345

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Disclosure:
The content provided within this website is presented for information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Other restrictions may apply. Mortgage loans may be arranged through third party providers.
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