More Information About Jumbo Loans
If you are interested in a luxurious home or live in an expensive area, you will likely need to borrow a substantial amount of money to finance your home; this is where a Jumbo Mortgage Loan comes into play. A jumbo loan is a mortgage that allows you to finance the purchase of a home in excess of the Federal Housing Finance Agency’s conventional lending limit.
Jumbo loans, also known as non-conforming loans because they exceed FHFA limits, typically require a larger down payment. In order to qualify for a jumbo loan, you must satisfy stricter requirements regarding the type of property, the down payment, your credit score, and your debt-to-income ratio. The requirements for jumbo mortgages are more stringent than those for conventional loans, and not all borrowers may qualify.
You’ll Probably Need a Jumbo Loan in Los Angeles
Jumbo loans have three primary requirements: high credit scores, a low debt-to-income ratio (DTI), and adequate cash reserves. Minimum credit score for jumbo loans varies by mortgage lender, but is usually at least 700. If you require a particularly large loan, you will likely need to investigate mortgage lenders who offer jumbo loans.
For instance, one lender may make it easier to obtain loans for second homes, while another may require a larger down payment. Individuals with lower credit scores can obtain FHA loans above the agency’s limit with only a 3.5% down payment.
Jumbo loan servicing limits are currently $726,200 for a single-family home in all states (except Hawaii, Alaska, and certain federally designated high-cost markets, which have limits of $1,089,300). Due to the fact that lenders typically require larger down payments on jumbo loans compared to conforming mortgages, we examined the down payment requirements and fine print of each lender.
In order to purchase a multi-million dollar home in an ultra-expensive area, prospective buyers will likely need to find a local mortgage lender who specializes in jumbo loans with higher balances that are tailored to their markets. If you need help finding a jumbo loan, contact us today.