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Jumbo Home Loan – Loan Smart

Jumbo Home Loan

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Overview

Jumbo mortgages are home loans that exceed conforming loan limits. A jumbo loan is one way to buy a high-priced home. A jumbo mortgage is a home loan for an amount that exceeds conforming loan limits established by regulation. The limit is $417,000 in most of the United States but is $625,500 in the highest-cost areas. Conforming loan limits are set by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy mortgages from lenders.

A jumbo mortgage is any single loan amount over the conforming loan limit. In some instances jumbo loans can be difficult to come by. However, there are plenty of lenders that offer jumbo mortgages. Jumbo mortgages are home loans that are larger than normal. They exceed the conforming limit which is the maximum loan amount that Fannie Mae and Freddie Mac will buy. Most mortgage lenders offer the same loan programs for jumbo loans as they do for conforming loans, such as fixed-rate loans, ARMs, and interest-only home loans.

Features and Benefits of Jumbo Home Loans

In general, mortgage home loans come in a variety of fashions. In the past, lenders have been very creative when constructing home lending products for potential borrowers. Jumbo loans are an additional lending product. Jumbo home loan products have loan amounts above the set conventional conforming limits.

Loan Size
Jumbo loans have higher purchase limits allowing for home loans in access of the set conforming limits

Interest Rate
In some cases, because jumbo loans are bought and sold on a smaller scale, they may have a higher interest rate than conforming loans

Combo Loans
Many jumbo mortgage lenders may allow you to take out a second mortgage for a combined loan-to-value ratio of up to 90%

Appraisal
Jumbo mortgages lenders will sometimes require 2 appraisals instead of just one

Credit
Jumbo mortgages typically come with stricter guidelines due to higher loan amounts, Many lenders require a credit score of 700 or higher

Loan Types
Jumbo Loans are typically available in a variety of fixed-rate and adjustable-rate loan options

Debt Ratio
The debt ratio limits will vary based on your lender, in general expect a debt-to-income ratio of 43% or less, and 6 to 12 months’ worth of reserves

Underwriting
The underwriting process for jumbo mortgages is similar to that of a conforming mortgage