• Jumbo Loans

  • What Is a Jumbo Loan?

    Another name for a jumbo mortgage is a non-conforming mortgage. This is a loan a lender makes you that doesn’t “conform” to the guidelines of Fannie Mae and Freddie Mac.

    Fannie Mae and Freddie Mac only buy mortgages meeting their guidelines for down payment, credit score, post-closing reserves, and loan amount. In 2017, the conforming loan size limit for a one-unit home is $424,100 nationwide, but can go higher in certain high-priced markets.

    When Should I Use a Jumbo Mortgage?

    You’d use a jumbo mortgage when you’re seeking a loan amount that’s greater than the conforming loan limit in your area.

    Certain lenders will categorize anything above $424,100 as a jumbo, even if the loan is being made in a high-cost area where the conforming limit goes as high as $625,500.

    Is Qualifying for a Jumbo Mortgage Different?

    Jumbo mortgages have the same overall qualifying methodology as a conforming loan. Lenders will look at credit score, down payment size, total monthly debt obligations relative to income (called your debt-to-income ratio), and money left over after closing.

    Credit score requirements are about the same for conforming and jumbo: a credit score down to 680 generally gets you most available loan options, albeit with a higher rate than you’d get with a top-tier credit score of 780 or greater.

    How Do Jumbo Rates Compare to Conforming Rates

    Before the financial crisis of 2008, jumbo loans typically had rates at least .25 percent higher than conforming loans because jumbo lenders were perceived as taking more risk making loans that couldn’t be sold to government-backed Fannie Mae and Freddie Mac.

    In the years following the financial crisis, federal regulations have impacted rate markets in such a way that has enabled banks to keep jumbo rates about the same as conforming rates.

    Questions? – Call Jim Steen Loan Originator Jax Office 904-332-7807 or Cell 904-200-0225