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If you want to purchase a property that exceeds the limits for a conforming loan, you’ll need to take out a jumbo loan. But while they enable you to borrow more money than conventional loans, they’re typically more expensive and can be harder to qualify for. Weigh the pros and cons before signing on the dotted line.
Breakdown of what you might pay monthly over the life of a $1,000,000 mortgage.
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Breakdown of what you might pay monthly over the life of a $900,000 mortgage.
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Breakdown of what you might pay monthly over the life of an $850,000 mortgage.
Read more…A jumbo loan is a mortgage product that has a higher lending limit than a conforming loan, as governed by Fannie Mae and Freddie Mac. As of 2019, the limit on conforming loans is $484,350 for most counties, though Alaska, Hawaii and certain counties with a high cost of living have a higher limit. Jumbo mortgages exceed this limit.
Because there is often a high risk attached with borrowing more money, lenders will charge a higher interest rate. You’ll also likely face stricter underwriting and larger down payment requirements due to the size of the loan.
Jumbo loans are available for primary residences, vacation homes and investment property types. Fixed and adjustable rates are available.
To qualify for a jumbo mortgage, you’ll generally need a down payment of at least 20% of the loan’s value. You may also need to show at least six months worth of recent mortgage payments in your bank account and provide evidence of your employment, earning potential and assets to ensure that you can repay the loan.
You’ll typically need a FICO score of 700 or higher to qualify for a jumbo loan.
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Generally, a jumbo mortgage is considered riskier than other types of mortgages because they’re not regulated by Freddie Mac or Fannie Mae. The loans are often larger, require a bigger down payment and cost more in general. However, in recent years, the spread in interest rates between jumbo and traditional loans has reduced.
Although jumbo loans enable you to borrow more money than conventional loans, their larger amounts and other factors make them inherently riskier. Compare your mortgage options to find the right loan for your circumstances.
Jumbo mortgage loans typically require a down payment of at least 20%.
Jumbo mortgage loan limits vary from $510,400 to $3 million, depending on the program. The highest FHA jumbo loan as of February 2019 is $729,750.
The limit can change every year, though occasionally it will stay the same for a couple of years.
It depends on the lender and your down payment. If you put less than 20% down, some lenders will require PMI.
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