A jumbo loan is a type of mortgage that is used to finance properties too expensive for conventional conforming loans. According to the Federal Housing Finance Agency (FHFA), the maximum amount for a conforming loan is $510,400. Homes that exceed the local conforming loan limit require a jumbo loan.
To find jumbo loan options in your area, search online for a “Jumbo Loan Near Me.”
Jumbo loans are also called non-conforming conventional mortgages. These mortgages are considered riskier for lenders because they aren’t guaranteed by Fannie Mae and Freddie Mac. In other words, the lender is not protected from losses if a borrower defaults.
Jumbo loans can be offered at both fixed and adjustable interest rates. They also come with a variety of terms.
There are many details to consider when applying for a jumbo loan.
Qualifying for a jumbo loan
As previously mentioned, jumbo loans are larger and riskier for lenders. This is why the underwriting criteria for jumbo loans can be stricter.
• Credit score
To qualify for a jumbo loan, lenders may require your FICO score to be higher than 700. Sometimes, it may have to be as high as 720.
• Debt-to-income (DTI) ratio
To ensure you don’t become over-leveraged, lenders will also look into your debt-to-income (DTI) ratio. Some lenders have a hard cap of 45% DTI. It is important that you reduce your debt, especially credit card debt, to keep your DTI lower.
• Cash reserves
Of course, some lenders may be more flexible if you have solid cash reserves. You may even use these reserves to cover a year of mortgage payments.
• Documentation
You’ll need extensive documentation in order to prove your financial health. You need to hand over your full tax returns, W-2s and 1099s when applying. You will also need to provide bank statements and information on any investment accounts.
• Appraisals
There is even a possibility that some lenders may require a second appraisal of the home you plan to purchase. In these cases, lenders may dispute the value of the property.
Jumbo loans vs. conforming loans
The key difference between a jumbo mortgage and a conforming loan is the size of the loan. It is important to contact the Best Mortgage Brokers In Philadelphia to learn more.
The main factors that differentiate jumbo loans from conforming loans are as follow:
• Larger down payment
Conforming loans may require smaller down payments, whereas jumbo loans are more likely to require down payments of at least 20%. Although some lenders may go as low as 10%.
• Potentially higher interest rates
Depending on the lender and your financial situation, Jumbo mortgage rates may be slightly higher than those of conforming loans. Even so, a number of jumbo loan lenders can offer competitive rates.
• Higher closing costs and fees
Jumbo loans typically have higher costs due to their extra qualifying steps and wide value range.
Below are some of the ways to get the best jumbo rates. Have a look:
1. Be sure to have a qualifying credit score and loan-to-value (LTV) ratio
2. Do not forget to research and compare interest rates
3. Look for alternatives that don’t involve lowering your price range
4. Opt for a bigger down payment or an 80-10-10 loan
5. Compare annual percentage rates (APRs) from at least three lenders
If any of this is confusing, do not be concerned. You can always contact a top-rated mortgage broker to help you. Feel free to consult Latitude Financial about any Mortgage Loan Bucks County can offer. Our experts have dealt with every type of loan and loan condition(s). As one of Pennsylvania’s most experienced mortgage brokers, Latitude Financial provides loans for new home buyers, investors and property owners of various real estate projects.
You can call us at 215-600-1810 to learn more about our services and speak with one of our brokers. We are just a phone call away. Call us today!
To find jumbo loan options in your area, search online for a “Jumbo Loan Near Me.”
Jumbo loans are also called non-conforming conventional mortgages. These mortgages are considered riskier for lenders because they aren’t guaranteed by Fannie Mae and Freddie Mac. In other words, the lender is not protected from losses if a borrower defaults.
Jumbo loans can be offered at both fixed and adjustable interest rates. They also come with a variety of terms.
There are many details to consider when applying for a jumbo loan.
As previously mentioned, jumbo loans are larger and riskier for lenders. This is why the underwriting criteria for jumbo loans can be stricter.
• Credit score
To qualify for a jumbo loan, lenders may require your FICO score to be higher than 700. Sometimes, it may have to be as high as 720.
• Debt-to-income (DTI) ratio
To ensure you don’t become over-leveraged, lenders will also look into your debt-to-income (DTI) ratio. Some lenders have a hard cap of 45% DTI. It is important that you reduce your debt, especially credit card debt, to keep your DTI lower.
• Cash reserves
Of course, some lenders may be more flexible if you have solid cash reserves. You may even use these reserves to cover a year of mortgage payments.
• Documentation
You’ll need extensive documentation in order to prove your financial health. You need to hand over your full tax returns, W-2s and 1099s when applying. You will also need to provide bank statements and information on any investment accounts.
• Appraisals
There is even a possibility that some lenders may require a second appraisal of the home you plan to purchase. In these cases, lenders may dispute the value of the property.
Jumbo loans vs. conforming loans
The key difference between a jumbo mortgage and a conforming loan is the size of the loan. It is important to contact the Best Mortgage Brokers In Philadelphia to learn more.
The main factors that differentiate jumbo loans from conforming loans are as follow:
• Larger down payment
Conforming loans may require smaller down payments, whereas jumbo loans are more likely to require down payments of at least 20%. Although some lenders may go as low as 10%.
• Potentially higher interest rates
Depending on the lender and your financial situation, Jumbo mortgage rates may be slightly higher than those of conforming loans. Even so, a number of jumbo loan lenders can offer competitive rates.
• Higher closing costs and fees
Jumbo loans typically have higher costs due to their extra qualifying steps and wide value range.
Below are some of the ways to get the best jumbo rates. Have a look:
1. Be sure to have a qualifying credit score and loan-to-value (LTV) ratio
2. Do not forget to research and compare interest rates
3. Look for alternatives that don’t involve lowering your price range
4. Opt for a bigger down payment or an 80-10-10 loan
5. Compare annual percentage rates (APRs) from at least three lenders
If any of this is confusing, do not be concerned. You can always contact a top-rated mortgage broker to help you. Feel free to consult Latitude Financial about any Mortgage Loan Bucks County can offer. Our experts have dealt with every type of loan and loan condition(s). As one of Pennsylvania’s most experienced mortgage brokers, Latitude Financial provides loans for new home buyers, investors and property owners of various real estate projects.
You can call us at 215-600-1810 to learn more about our services and speak with one of our brokers. We are just a phone call away. Call us today!
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