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Jumbo Loans

Jumbo Loans Agency Jumbo Loans

A jumbo loan is an excellent option if you are planning to buy a luxurious home which is pretty much like a mortgage for rich people. Compared to traditional loans, these loans are quite expensive which means the amount is greater than $424,100 for single-family homes as it is the limit of a conforming loan or the maximum amount that Fannie Mae or Freddie Mac can back up.

More about jumbo loans and when can you use it:

The maximum threshold for some places is quite higher as the housing markets of the same state or city are never the same especially of those that categorized in the high-cost community. A jumbo loan can take as long as the individual can easily qualify it for covering the cost of a vacation home or second family home, mortgage on an investment property or just the primary residence.

With it, there is no need for mortgages to be taken multiple times while emptying your savings. The limits of jumbo loans have increased according to the guidelines of FHA which means there is a higher chance of them being backed up by the government. The credit score should be excellent as a borrower, have a low debt-to-income ratio and also make a sizeable down payment.

A jumbo mortgage can use when the loan amount you plan to seek is higher than the conforming loan limit. For the majority of the countries that are above $417,000. However, in some areas, the conforming loan limits higher than that.  A jumbo loan is anything above $417,000 for many lenders even in places where the price of conforming ceiling is very high. The conforming loan limit in U.S. Virgin Islands, Hawaii, Alaska, and Guam are $636,150 and $954,225 for high-cost areas in these locations.

How to Qualify for a Jumbo Loan

Here’s a big deal; it is not easy at all to qualify for a jumbo loan even if you have million dollars in your pocket and doing well in your account. You have to jump through some circles to get through the process. All the documents like bank statements, W2 forms, tax returns and recent pay stubs should be ready to go before the application process starts. Especially as an entrepreneur, it is essential that the cash for about six months should be prepared to put in your jumbo loan.

The lenders usually prefer a debt-to-income ratio below 36% in a traditional mortgage loan. The debt-to-income ratio should be even lower when applying for a jumbo loan. Also, comparing mortgage rates for jumbo loans while shopping around isn’t a bad idea. Finding investors in secondary mortgage market or big banks are the ones to go.

The Takeaway

When planning for a significant property, a jumbo loan is the right kind of mortgage with an advantage that the person does not have to deal with more than one small investment. However, it is essential to make sure that keeping up with all the payments; you will be able to afford it easily because financial security comes first.

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