Jumbo mortgages are available for primary residences, second or vacation homes and investment properties, and are also available in a variety of terms, including fixed-rate and adjustable-rate loans. A jumbo loan will typically have a higher interest rate, stricter underwriting rules and require a larger down payment than a standard mortgage.
Jumbo loans are considered riskier for lenders because these loans can’t be guaranteed by Fannie Mae and Freddie Mac, meaning the lender is not protected from losses if a borrower defaults. Since they can’t be resold, jumbo loans generally remain on the lenders’ own books, making them a type of portfolio loan.
A down payment of at least 10%, but some lenders may require more. The standard down payment required for a jumbo loan will be 20% of the loan amount (i.e., the home’s selling price). Some mortgage lenders may request a jumbo loan down payment as much as 25% or 30%. At the same time, some borrowers may qualify for a jumbo loan with a 10% down payment.
The maximum debt-to-income ratio (DTI) for jumbo loans is usually 43% Your DTI is the percentage of your monthly earnings used to pay off all debt obligations and it’s used by lenders to determine how large of a monthly mortgage payment you can handle.
Most lenders want to see ample cash reserves and at least six months’ worth of mortgage payments. Some other lenders would want to more, sometimes all the way to 24 months of cash (or liquid assets) in your Bank Account. The exact amount required for cash reserves varies by lender and may change based on your credit score, DTI ratio, the type of property you’re financing, and how many homes you have financed.
A FICO score of 700 or higher, and sometimes as high as 760
Extensive documentation, such as full tax returns, W-2s, 1099s, bank statements, and investment account information
More than one home appraisal
Lenders want to be sure their loans will be repaid even in the event of financial hardship, so they take a higher risk on jumbo loans.
A Jumbo loan is a Conventional loan however, it is not a conforming loan. People generally mistake a Conventional loan for a Conforming loan.
Conventional loans are all mortgage loans that are not government-backed, like Conforming, Jumbo, and DSCR loans. Government loans are FHA, VA & USDA.
On January 1, 2024, the conforming loan limit increased to $766,550 in most of the U.S. In high-cost areas, it increased from $1,089,300 to $1,149,825.
Conforming loans are those who “conform” to Fannie Mae & Freddie Mac guidelines. In 2023, the conforming loan limit for conventional loans was $726,200. The Federal Housing Finance Agency (FHFA) sets this limit based on its House Price Index, which increases as home prices rise.
If your loan amount exceeds the conforming loan limit for your area, it’s considered a Jumbo loan. Jumbo loans may have stricter qualifying requirements and potentially higher interest rates compared to conforming loans.
Jumbo mortgage rates have historically been higher than Conforming loans; however, in the past two years, they have been very similar.
How much is a jumbo loan? A jumbo loan is a mortgage loan that is larger than the conforming loan limit set by the U.S. government, which is currently $766,550 in most areas of the U.S.. The loan limits are higher in some high-cost counties in continental United States and Puerto Rico, and higher still in Alaska, Hawaii, Guam, and the U.S. Virgin Islands.
Substantial cash reserves required: Jumbo loan borrowers are often required to have six to 12 months’ income-available cash reserves, while a few lenders require 24 months.
– Flexible terms: Jumbo loans have flexible terms for how much money can be borrowed and what types of properties can be financed.
– Co-borrowers: Jumbo loans allow for a co-signer who won’t be living at the property to sign the loan agreement with the borrower.
– Fixed-rate and adjustable-rate programs: Jumbo loans can be fixed-rate or adjustable-rate mortgages.
– Potentially lower interest rates: ARM rates can be 1% lower than fixed-rate mortgage rates.
– No Private Mortgage Insurance (PMI) required if less than 20% down.
Typically, borrowers making a down payment of less than 20 percent of the purchase price of the home will need to pay for mortgage insurance. However, you do not need mortgage insurance on Jumbo loans originated by Bluecastle Lending
Yes, they are harder to qualify. For a jumbo loan, you’ll need a higher credit score — and possibly a higher income, down payment or more assets — than you would for a conforming loan. For example, you need a minimum of a 700 credit score to be considered for a jumbo loan versus 620 for a conforming loan.
Historically, jumbo loan mortgage rates are higher rates than conventional loans. However, in 2022 and 2023, jumbo loan rates were almost the same as conforming loans. As of December 7, 2023, the national average for a 30-year fixed-interest jumbo rate for a jumbo loan was 7.47%, compared to 7.42% for a 30-year fixed-rate mortgage.
A conventional loan is a broader category than a conforming loan. All conforming loans are conventional loans, but not all conventional loans are conforming loans. Most conventional loans are called “conforming loans” because they follow specific rules set by Fannie Mae and Freddie Mac. However, there are other conventional loans that are not conforming, like Jumbo loans, Bank Statement loans, and DSCR loans.
Yes, you can refinance a jumbo mortgage. You can refinance a jumbo loan at any time, but you’ll need to qualify with a strong financial profile. You can refinance your jumbo mortgage at any time.
There are different types of home loans, each with its own pros and cons. Some common home loans include conventional loans, jumbo loans, FHA loans, VA loans, USDA loans, fixed- and adjustable-rate mortgages, non-QM loans, and construction loans. Keep in mind that there may be overlaps with loan programs.
Mortgage interest rates can change daily, weekly, or even hourly. These changes are often influenced by economic changes, world events, and the Federal Reserve. The main factors for this flux are the economy, inflation, and the Federal Reserve Board. Rates tend to rise when the economy is strengthening, and they tend to fall when the economy is weakening.
A Loan Against Property (LAP) is a secured loan that allows you to use your property as collateral to apply for a loan. The loan amount is based on the property’s value and other factors. A mortgage loan.
Yes you do, up to 1.25% of the loan amount or $10,000.00, whatever is lower. See offer terms and restrictions for more details.
Yes you do, up to $2,500.00 payable in Closing Costs. See offer terms and restrictions for more details.