If you’re looking to buy an expensive home and need a large loan amount, a Jumbo Loan could be the right option for you. Jumbo loans exceed the conforming limit on loans set by Fannie Mae and Freddie Mac. How do you know if you’re loan amount is considered “jumbo”? And how do you know if you qualify for a jumbo loan?
How jumbo is jumbo?
In most states, the conforming limit is around $417,000, but varies by location and number of units on the property. Other areas that are specified to have a higher cost of living have a higher conforming limit of about $625,500. The official chart can be found here. If you are looking to purchase a home and would like a loan amount greater than the conforming limit for your area, it’s likely that you will want to apply for a Jumbo Loan.
Because jumbo loans are so large, the down payment and interest rates will usually be larger than other loans. Also, there is no private mortgage insurance (PMI) with a jumbo loan. To qualify, requirements for the borrower will be different compared to requirements of other loan types. Usually jumbo loans require a lower debt-to-income ratio, a higher credit score, and higher emergency funds.
Rates on jumbo loans are still at an all time low. Years ago, they were much higher than rates on conventional loans, but now they have shown to be lower at times. Also, interest on any loans equal to $1 million is able to be tax-deducted.
If you would like to get more information on jumbo loans, or if you would like to see if you pre-qualify, contact one of NFM Lending’s Licensed Loan Originators by clicking here.