Jumbo Loans – Move Up Buyers

A jumbo mortgage is a type of mortgage loan whose principal balance exceeds conforming loan limits for Fannie Mae and Freddie Mac, which are currently between $424,100 and $636,150, depending on where you live. Jumbo mortgage interest rates are competitive with conventional loans, but income, credit score, and appraisal requirements can be stricter.

If your loan amount (not the purchase price) on a home you wish to purchase will exceed these limits, you’ll probably need to obtain a jumbo mortgage.

Requirements to get a jumbo mortgage:

The lending standards for jumbo mortgage loans vary by lender, but in general, here’s what to expect:

• You’ll need a strong credit history, which typically means a FICO credit score of 700 or higher for a jumbo loan.
• You can get approved for a jumbo mortgage with a debt-to-income ratio as high as 45%, but these loans often have higher reserve requirements then conforming loans.
• With a conforming loan, you can make a smaller down payment if you pay for private mortgage insurance (PMI). There is no such option with jumbo mortgages, so plan on a down payment requirement of at least 20%.
• Like a conventional mortgage, the property’s appraisal must justify the price you’re paying for the home. Many jumbo mortgage lenders require two appraisals, as opposed to just one for a conventional mortgage.