Do you live in an area with high housing costs, or are you in the market for a luxury home? When you finance an expensive property, Jumbo mortgage loans allow you to borrow more than a Conforming or government loan. They’re not designed to help borrowers buy more house than they can afford. “Instead, they’re for financially secure borrowers buying homes that are more expensive than average.” Get the answers to common questions about Jumbo mortgage loans to determine if a Jumbo loan is right for you.
- What does it mean to be a “Non-Conforming” mortgage loan?
A Conforming loan is a non-government loan that is backed by Freddie Mac and Fannie Mae and meets the requirements set by the Federal Housing Finance Agency (FHFA). A Jumbo loan is considered to be non-conforming because the loan amount is higher than the county loan limits set by the FHFA.
- How can I find out the loan limits for my county?
In 2019, the maximum loan limit for most counties in the U.S. is $484,350. However, in states like Hawaii or Alaska, the conforming loan limit is much higher. Check the FHFA map for the maximum loan limits in your local market.
- What kind of credit score do I need to qualify?
Jumbo loans commonly require excellent credit scores, a score of 700 or higher is ideal. Borrowers typically also have a good credit history, meaning they make timely payments and maintain low or zero balance on credit cards.
- What documents do I need to provide?
“The documentation requirements are much higher on a jumbo loan than on a Conforming loan,” says David Battany, executive vice president, capital markets at Guild Mortgage, “This can be a surprise for some borrowers. The underwriter will examine at a much deeper level of detail the applicant’s tax returns, assets and other qualifications.”
- Do I have to put down a large down payment?
You don’t necessarily need a large down payment to qualify. With excellent credit, some lenders offer financing for as little as 5% down.
- Are Jumbo loans only fixed-rate loans?
Jumbo loans are available in different fixed-rate loan terms and as adjustable-rate mortgages. Read more on the differences between an ARM and a fixed-rate loan.
- Are loan rates for Jumbo mortgages higher than conforming loans?
Depending on the loan term and whether you get a fixed- or adjustable-rate mortgage, the interest rate and annual percentage rate will vary. Rates will also differ from one lender to the next.
- How much buying power can I get with a Jumbo loan?
Banks and lenders set their own maximum limits for Jumbo loans. For example, Guild Mortgage offers Jumbo loans as high as $3 million.
- Do Jumbo loans require private mortgage insurance?
If you put less than 20% down, whether or not you’ll need to pay mortgage insurance is up to the lender.
- Are these loans only available for single-family homes?
Jumbo loans are available for all types of homes, including single-family homes, 2-4 unit residences, condominiums and planned unit developments (PUDs). They are also available for purchase or refinance.
If you’re looking for more buying power, connect with a loan officer, and find out if a Jumbo mortgage is right for you.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply.