What is a Jumbo Loan?
Loans are considered Jumbo loans if the loan amount exceeds the conforming high-balance loan limits. For most loans there is a maximum value amount that a borrower can borrow of any individual mortgage from a lander. This was set up by the Fannie Mae and the Freddie Mac enterprises. The current limit is $417,000 in most of the US but this number can reach up to $625,000 in some high-cost areas.
These loans can be used for primary residences, second vacation homes, as well as investment properties
Jumbo can be considered a higher risk for lender mainly due to the large monetary size rather than the credit quantity. These loans can sometimes have higher interest rates than conforming loans and can have a stricter underwriting. This is due to the large amount that is being borrowed.
The cost of a Jumbo loan is generally higher than than other loans that are conforming loans. The spread ranges between .25% and .5% however the cost will vary based on the lender. In recent years the rates are attractive for Jumbo loans so make sure to shop around.
What are the qualifications?
- 20% down or (20% equity in refinance)
- Documented income proof required
- Monthly mortgage payment must be no more than 38% of income before taxes.
- Likely will be required to get an adjustable-rate loan.
- Requires 2 appraisals
- Requires a high credit score
While Jumbo Loans are not the easiest loans to qualify for they can help make big purchases. The rates of Jumbo loans are always changing so it is important to stay current and shop around with lenders. Talk with a lender to day to see if you qualify and get a quote.
Jumbo mortgage loan rates, lenders and guidelines. Jumbo loans are popular in 2016 and each lender is different. Get qualified for free.