What Is A Jumbo Mortgage?
By Gustan Cho
A Jumbo Mortgage is a residential mortgage loan that exceeds the conforming mortgage loan limit. The conforming mortgage loan limit is generally capped at $417,000 in most parts of the United States with the exception of Alaska and Hawaii where the conforming mortgage loan limit is capped at $625,000.
When you start to explore your mortgage options, you may hear the term “jumbo loan.” If you do, you are looking at properties that are more expensive for the area. If you are considering homes requiring a mortgage that exceeds $417,000, it’s a good idea to find out more about jumbo loans and discuss them with your lender.
For example, if you want to purchase a $700,000 home and can afford to put a substantial down payment on this home purchase, the maximum a mortgage lender will be able to lend you is $417,000. The $417,000 is the maximum conforming mortgage loan limit. If you only have 10% or 20% down payment, this can present a problem because the maximum mortgage lender’s limit to lend is capped at $417,000. In this case scenario, you would need to seek a Jumbo Mortgage which are mortgage loans that is over $417,000. A Jumbo Mortgage is called non-conforming mortgage loans and are mortgage loans that are over $417,000.
Jumbo Mortgage Lending Guidelines
Jumbo Mortgage lenders are different that conventional conforming mortgage lenders because they each Jumbo Mortgage lenders have their own Jumbo Mortgage lending requirements and guidelines. In general, most Jumbo Mortgage lenders require lower debt to income ratios. Most Jumbo Mortgage lenders cap their debt to income ratio requirements to 40% DTI. Most Jumbo Mortgage lenders require higher credit scores. The minimum credit score a Jumbo Mortgage lender will require is a minimum credit score of 660 FICO. A 660 FICO credit score is considered extremely low for a Jumbo Mortgage loan applicant and with such a low credit score, the Jumbo Mortgage loan applicant will most likely pay a higher interest rate and the down payment requirement will be substantially more than those with higher credit scores.
Jumbo Mortgage With 10% Down Payment
In general, most Jumbo Mortgage lenders require a minimum of 20% down payment with a 700 FICO credit score. However, I can now offer Jumbo Mortgage with 10% down payment for Jumbo home buyers in Illinois, Florida, California, Washington, Indiana, and Wisconsin. Jumbo Mortgage with 10% down payment requires a maximum of 40% debt to income ratios, and a minimum credit score of 740 FICO. For those who do not have a 740 FICO credit score, I can help you get your credit scores to 740 FICO or greater where sometimes there are quick fixes such as paying down credit cards or establishing new positive credit or even paying off certain debts.
Other Jumbo Mortgage Loan Programs
Besides Jumbo Mortgage with 10% down payment, there are other Jumbo Mortgage loan programs such as Jumbo Mortgage with 15% down payment. The 15% down payment Jumbo Mortgage loan program offers no private mortgage insurance required by the Jumbo Mortgage loan borrower and have much more lenient underwriting guidelines than the Jumbo Mortgage with 10% down payment mortgage program.