What is a Jumbo Loan?
Jumbo loans are any mortgages that exceed the loan limits that are set by the Federal Housing Finance Agency (FHFA) for Fannie Mae or Freddie Mac qualified loans.
Who Needs a Jumbo Loan?
Jumbo loans are for borrowers looking to buy a luxury home or one located in a very competitive real estate market. These are not guaranteed by the government agencies, Fannie Mae or Freddie Mac. This, along with more money being involved, makes them much riskier for lenders. This risk means much stricter approval requirements than any other loan. Make sure you can meet these requirements below.
Jumbo loan requirements
- You make between $250,000 and $500,000 a year
- Your credit score must be 700 or above
- Your debt-to-income ratio (DTI) should be under 43%, ideally close to 36%
- Your cash reserves must cover your payments for six months
- Full documentation on tax returns, W-2s, and 1099s, liabilities, etc.
Loan Amount and Cutoff Limit
The loan limit for jumbo loans nationwide is $484,350 for single-unit homes (2019). Jumbo loan limits for multi-unit homes will vary by county because of the difference in real estate markets.
Jumbo loan drawbacks
- Much higher down payment of at least 20% in most cases
- Higher interest rates, but lenders can offer rates competitive with conforming loans
- Higher fees and closing costs
- May not give you the big tax break you expect; mortgage interest rate debt deductions are limited to $750,000
We’re Here to HelpMain Number: (405) 722-5626 Email: firstname.lastname@example.org
Here at Financial Concepts Mortgage, we believe in offering a variety of loan types to make sure you get what you need. If a jumbo loan doesn’t seem right for you, we can help you find the loan options that are most beneficial for your situation. It can be difficult to understand the differences between the many home loan types; we are here to answer any question you may have.
Although we primarily serve homebuyers in Oklahoma, we are also able to provide loans to anyone in Texas and Arkansas.