How to Qualify for a Jumbo Mortgage Loan
In shopping for a house, it is always best to find the right mortgage to fit your needs. If you are looking into higher price ranges, there may be a need for a jumbo loan. Loans which exceed the conforming loan limit set by FHFA each year (currently at $726,200 for 2023) are considered jumbo mortgages and have different requirements to qualify.
Jumbo mortgage loans usually have slightly higher interest rates as compared to their conventional counterparts with typical mortgage. Usually, it is .25% to .75% higher. Typically, there are three types of jumbo mortgages – 30 year and 15 year fixed and 3, 5, 7 and 10 year ARMS.
It is usually a bit more difficult to qualify for a jumbo mortgage. First, you typically need to put a down payment of at least 10% and your credit score depending on the lender and program should be at least 680 or higher. Your debt to income ratios also are a bit tighter than a conforming loan amount as well and usually not to exceed a DTI ratio of 45%.
Lastly, jumbo mortgages need to show more reserves or money in a bank or investment account to qualify over what is required on a conforming loan. Usually, a minimum of 6 months of reserves is required.
Jumbo loans carry more risk because of the large amount of money being lent out on single property.
Jumbo mortgages are not for everybody so it is best to work with you trusted Home Loan Advisor at Hall Financial to talk through the various options and select what is best for you.