Jumbo loans or jumbo mortgages are a form of home financing where the total amount available exceeds the conforming loan limits that have been set in place by the Federal Housing Finance Agency or FHFA. These special jumbo mortgages are very different from conventional mortgages because they are not able to be purchased, secularized or guaranteed by Fannie May or Freddie Mac. Essentially designed to help finance luxury homes and properties, jumbo loans are most often utilized in real estate markets that are highly competitive. Additionally, they come with a set of unique tax implications and underwriting requirements.
How to Qualify for a Jumbo Loan
Interested in qualifying for a jumbo loan? If you have fallen in love with a home or property that costs more than $647,200, the 2022 increased conforming loan limit, and you have significantly less than that saved, you may need to consider a jumbo mortgage loan. And to get approved for one, you’ll need to meet stricter credit requirements than what is required for homeowners who are applying for a Conventional Conforming loan amount (less than $647,200) because there is more risk involved with Jumbo Loans.
To get approved, you will need a credit score of 680 or above and debt-to-income ratio that is below 43%. For higher loan to values (LTV), the minimum credit score is 740 and maximum debt-to-income ratios of 35% are required. These requirements will vary, based on your unique loan profile. Additionally, verification of more assets in reserve will be required for a Jumbo Loan than would be required for a Conventional Conforming loan amount, to ensure you have sufficient assets to pay the Jumbo Loan payments.
Interest Rates for Jumbo Loans
One of the other great benefits of jumbo loans is the fact that while they used to carry much higher interest rates than conforming loan amounts, in recent years that gap has closed significantly. In fact, today’s interest rates for jumbo loans are often on par with Conventional Conforming loans and in some cases, are even lower!
Contact Mortgage Investors Group Today
Want to learn more about the benefits of jumbo loans? Contact our friendly and experienced team today for more information.
