There are mortgage loan limits set on the various mortgage loan programs. For example, FHA standard loan limits are capped at $271,000 unless the property is located in a high cost area. For example, FHA loan limits in Sarasota, Tampa, and surrounding areas are capped at $271,000 whereas areas in Palm Beach County, Miami Dade County are at capped at $345,000. The higher FHA loan limits are set by HUD in counties that is classified as high cost areas. For conventional loans, the Federal Home Loan Mortgage Corporation, Freddie Mac, and the Federal National Mortgage Association, regulate the home loan industry and set standards on mortgage lending guidelines. The two agencies regulate mortgage lending guidelines and set maximum lending limits. Today, the maximum conventional loan limits is capped at $417,000 in most counties in the United States. Standards set by Fannie Mae and Freddie Mac are secured by the government and are called conforming loans. Any mortgage loans that fall outside the conforming lending limits are classified as non-conforming loan or JUMBO MORTGAGES.
What Is A Jumbo Mortgage?
A Jumbo Mortgages residential mortgage loans that falls over the maximum lending limits set by the government. It is called non conforming loans since it does not conform to the government’s maximum lending limit. Any mortgage loan over the maximum lending conforming limit of $417,000 is considered a Jumbo mortgage. Jumbo mortgages normally have higher interest rates and the lending qualifications are much more tougher than conforming loans. To get approved for Jumbo mortgages, the home needs to appraise and the appraiser needs comparable sales of the higher priced homes. You can not have a white elephant where most of the homeowners in the neighborhood have standard conforming loans and your house is the only high end home that is larger and more expensive than the norm. Most folks who seek a Jumbo mortgage need to put 20% down payment and need credit scores of 680 FICO or higher. Maximum debt to income ratios are capped at 45%. Jumbo mortgage borrowers who are seeking the best available interest rates need credit scores of 740 FICO or higher and loan to value at 75%. Jumbo mortgage interest rates are normally 050% higher than regular conforming interest rates.
Conforming Loan Limits
Conforming loan limits set by Fannie Mae and Freddie Mac for 2014 is capped at $417,000 on counties that are not classified as high cost areas. For two unit buildings, the maximum conforming limit is capped at $533,850. For three unit buildings, the maximum conforming limit is capped at $533,850. Maximum three unit conforming loan limits is capped at $645,300. $801,950 is the maximum amount for a 4 unit property for a conforming loan. Conforming limits are capped at higher amounts for Hawaii, Alaska, Guam, and the United States Virgin Islands. For these areas, the maximum conforming lending limit for a single family home is $625,000. For two unit residential properties it is $800,775. For three unit properties it is capped at $867,950. For four unit properties it is capped at $1,202,925.
Jumbo Mortgage Lending Guidelines
Jumbo Mortgages have tougher mortgage lending criteria than conventional mortgage loans. Plus the interest rates on Jumbo mortgage loans are slightly higher than conventional mortgage loans. Most Jumbo mortgage lenders require a minimum of 20% down payment on a home purchase. To get the best Jumbo mortgage interest rates, the Jumbo mortgage loan borrower should have at least a 740 FICO credit score, have 25% down payment, have no more than a 40% debt to income ratio, and have reserves. However, you can qualify for Jumbo Mortgages with lower credit scores and 20% down payment and less than 20% down payment.
Special Jumbo Mortgages
We now offer a 10% down payment, 90% loan to value, with no private mortgage insurance required to qualified Jumbo mortgage loan borrowers. To qualify, the Jumbo mortgage loan borrower needs to have a minimum credit score of 740 FICO. The borrower’s debt to income ratios cannot be greater than 40% DTI. For a slighter higher rate, private mortgage insurance is not required to be paid by the mortgage loan borrower. The Jumbo mortgage lender wants to see a strong credit borrower with ample reserves and assets.
80/10/10 Mortgage Loan Programs For Jumbo Home Buyers
An alternative to Jumbo mortgage loans is the 80/10/10 mortgage loan program where the home buyer who wants to purchase a higher priced home that exceeds the $417,000 conforming limit caps can get a $417,000 conventional loan and get a second mortgage. As long as the home buyer can put a 10% down payment and get a $417,000 conforming loan approved, the difference can be funded from a second mortgage.