Purchase a High-End Home with a Jumbo Mortgage
Buyers seeking to purchase a home that’s beyond the financial reach of a traditional mortgage should consider a Jumbo Loan.
Jumbo Loans At A Glance
- Jumbo Loans exceed limits set by the Federal Housing Finance Agency. This type of financing cannot be purchased, guaranteed or securitized by Fannie Mae or Freddie Mac
- Home buyers are subject to more meticulous credit requirements than when applying for a conventional loan
- A shining credit score and extremely low debt-to-income ratio are required for approval
- The annual percentage rate (APR) is in line with conventional mortgages and down payments are typically around 10 to 15% of the total purchase price
The Big Difference of Jumbo Loans
Jumbo Loans are non-conforming. This means that they are types of loans that cannot be purchased by Fannie Mae or Freddie Mac, agencies that were established to help low-to-moderate income buyers purchase homes. To make sure the agency’s funds were being used for that purpose—not to help wealthy buyers—they established loan limits based on median home prices.
Jumbo Loans For Large Purchases
Home buyers with their sights set on a property that’s approaching a half-a-million dollars or more—and don’t have that kind of cash in the bank—are going to need a Jumbo Loan. These types of loans are designed to finance homes in competitive real estate markets and generally luxury properties. Jumbo Loans include underwriting requirements and tax implications that are unique to the home-buying market.
Limits Start at $484,350, Except in High-Income Areas
In most areas, any mortgage worth more than $484,350 counts as a jumbo loan. The limit varies based on county though, and some high-cost areas like New York City or Hawaii have a higher limit of $726,525.
Standards Are Strict
Unsurprisingly, you must be in excellent financial standing to qualify for a jumbo loan. Usually a credit score of more than 700 is required, and you must show you have sufficient income via tax forms, bank account information, and pay stubs. A solid debt-to-income (DTI) ratio is also required, typically under 43%.
Perfect for Luxury Homes
Even if your home doesn’t qualify for the maximum traditional loan, you can still get a great mortgage with competitive rates. If you’re shopping for a luxury home, we can help. Contact us today to get pre-qualified and get started making your dream home a reality.