Jumbo Loans

In the market to buy a home? First things first, you may need financing. When it comes to financing, it is very important to know what sort of loan program fits your needs. If you are an individual looking to finance a home that exceeds the loan limits established by regulators, you may need a jumbo loan.

A jumbo loan, or jumbo mortgage, is a loan necessary for a property that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). The reason these jumbo loans are different from conventional mortgage loans is because they cannot be securitized by Fannie Mae or Freddie Mac. Additionally, jumbo loans are meant for high-end real estate in competitive markets, and due to this, typically have specific underwriting requirements.

Currently in the United States, a jumbo loan is required for a loan in excess of $424,100 and can range all the way up to $636,000 in higher priced areas. These jumbo loans can vary depending on state and even county, and range in higher amounts in high-cost areas, California leading the pack.

In order to qualify for a jumbo loan mortgage, requirements have become much more vamped up since the housing crisis in 2008. To get approved, you will need a credit score of 680 and above a debt-to-income ratio under 40% (although some products will allow you to go to 47%). You will also need proof of liquid assets and have cash reserves that equal up to six months of payments. The amount you will be able to borrow ultimately comes down to property value, credit score and assets. With mortgage rates still falling, it is a perfect time to lock in your rate today for a jumbo mortgage.