A Jumbo Loan is a mortgage loan that exceeds the limits set by the Federal Housing Finance Agency (FHFA). Jumbo Loans are called non-conforming loans because they don’t conform to these limits as conventional loans do.
Since Jumbo Mortgages don’t have the guarantees that come with conforming loans, borrowers tend to be subject to greater scrutiny and may have higher borrowing costs.
Important Information About Jumbo Loans:
Down Payment
Jumbo loans typically have much higher down payment requirements than conforming loans. It’s common to see lenders require 20% down on jumbo loans for single-family units. You may also need a higher down payment for second homes and multifamily units. Finally, the down payment required is based on your loan amount and credit score as well.
Credit Score
The exact credit score you’ll need to qualify for a jumbo mortgage will depend on the lender and the loan terms. Typically, the minimum credit score required for a Jumbo Loan is 700. There are some options for a score as low as 680, however, if your score is under 700, be prepared to pay a slightly higher interest rate.
Debt-To-Income Ratio (DTI)
A low DTI ratio is very important when you get a jumbo loan because it tells lenders that you will have enough cash flow to cover your mortgage payments. If you have a higher down payment or credit score, you may qualify for a jumbo loan with a higher DTI ratio, however, typically you’ll need a DTI of 45% or lower.
Asset Reserves: A Jumbo loan will typically require you to be able to verify more assets than other types of loans. This is because there is an elevated risk level for the investor with the higher loan amounts.
Working with Montis Lending Group
- We average 15 days from Submission to Clear to Close
- We work with a variety of lenders to provide you with competitive rates and flexible loan terms
- Our experienced mortgage broker will work with you to find the best loan option that meets your specific needs and financial goals
