Jumbo mortgages resemble conventional mortgages, the only difference here is that jumbo mortgages are loans that exceed conforming loan limits established by regulation. They are typically used to buy a high-priced or luxury home and thus have tighter guidelines than other loan types. If you have a low debt-to-income ratio, a strong credit score, and a large down payment, then a jumbo loan may be what you are looking for.
The underwriting process for jumbo mortgages is similar to that of a conforming/conventional mortgage with a few added requirements, such as the following:
- Property Appraisal(s)-Jumbo lenders will sometimes require 2 appraisals instead of just 1.
- Credit History- Borrowers must generally have a strong FICO score of 700 or higher.
- Financial Ability-Debt-to-income may be required to be lower than 45% in order to show ability to pay.
- Down Payment- The required down payment for the property will typically be around 20%, however, down payment requirements differ and may be lower or higher depending on the individual file.
- This is dependent on the lender; the minimum down payment could be 10%, 15%, 20% or 30% for home purchases.
Jumbo mortgages are a good solution for borrowers who are looking to buy a higher priced home when a conventional mortgage just won't cut it. There are a variety of options available to borrowers who want to use a jumbo loan to finance their purchase so be sure to contact me to find out if a jumbo loan would be right for you.