What is a jumbo loan?
A jumbo loan is a mortgage designed to help finance luxury homes, as well as homes in areas with highly competitive real estate markets. These mortgages are designed for financing amounts greater than the limits set forth by the Federal Housing Finance Agency (FHFA). The FHFA sets new loan limits each year. In 2017, the FHFA’s limit for one-unit properties was set at $424,100 (though it can be higher in some areas of the country). If you’re looking to get a mortgage for over that amount, it’s considered a jumbo mortgage.
What are the qualifications of a jumbo mortgage?
Applying for a jumbo mortgage is not like applying for a Conventional or FHA mortgage. Not only is there a lot more money involved in a jumbo mortgage, but since these loans aren’t guaranteed by Fannie Mae and Freddie Mac, lenders carry a lot more risk when they issue them. For this reason, they are harder to qualify for.
You’ll need a credit score of at least 700 to qualify for a jumbo mortgage, and you’ll also want to make sure that your debt-to-income ratio is only about 35 percent; though, you may still qualify if it’s under 43 percent. Additionally, you’ll need to prove that you have cash reserves enough to cover six months worth of mortgage payments.
Is a jumbo loan right for you?
At Urban House Realty, we understand that finding the perfect home is just one step in the home-buying process, which is why we’ve partnered with Traci Gatzek from NOVA® Home Loans. With NOVA Home Loans on our side, we have what it takes to meet your need throughout every step of the home-buying journey.
To learn more about jumbo mortgage and to find out if they are the right option for your needs, contact us today!