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JUMBO MORTGAGE LOAN
A JUMBO loan is a mortgage for an amount that exceeds the limits set by Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy most U.S. home loans and package them for investors. If you’re buying a mansion — or just a regular home in a high-priced area — you might need a JUMBO loan.
MINIMUM CREDIT SCORE
700
KEY ADVANTAGES
CONVENTIONAL PORTFOLIO LOANS WITH FIXED AND ADJUSTABLE TERMS THAT EXCEED NORMAL CONFORMING LOAN LIMITS
JUMBO
The main benefit for borrowers is that a jumbo mortgage allows you to borrow more than the limits imposed by Fannie Mae and Freddie Mac. For instance, if you want to borrow $1 million against a $1.5 million home, a jumbo loan makes it possible. Some borrowers prefer to finance more of the home’s cost rather than tying up cash, making the jumbo mortgage a useful financial tool and part of an overall investment strategy. You can still get a competitive interest rate and finance the home of your choice without being restricted by the dollar limit on conforming mortgages.
What are the JUMBO loan requirements ?
Just like a conforming loan, jumbo loans have a similar application and evaluation process. Mortgage lenders will consider your credit score, down payment amount, current debt, debt-to-income ratio, employment history, money left over after closing, and more.
Jumbo loans require borrowers to have an above-average credit score. This credit score gives borrowers access to the best loan options available. Remember, with a higher credit score, you will be offered better rates and terms. Money left over after closing, also known as reserves or post-closing liquidity, is closely examined by your mortgage lender.
If you are applying for a jumbo loan, lenders typically like to see 12 months of reserves after closing, with half in liquid assets (in a checking or savings account) and half calculated from retirement assets. Lenders can make exceptions if you have a low debt-to-income ratio and a high down payment.
