If you’re considering purchasing a more expensive home, a jumbo loan might be the right option for you. A jumbo loan amounts to more than the limit set by the Federal Housing Finance Agency for a traditional loan. However, because jumbo loans aren’t backed by a government loan agency like Fannie Mae or Freddie Mac, qualifying is much more difficult than for a traditional mortgage.
Our HUNT Mortgage team is here to help you analyze your situation and determine whether a jumbo loan is the best financial decision for you. Both fixed-rate and adjustable-rate jumbo loans are available.
Requirements for a jumbo loan approval include:
HIGH CREDIT SCORE
Generally, a jumbo loan lender will require you to have a credit score of at least 700, whereas with a traditional loan you can usually get approval with a score in the 600s if you meet other requirements.
LOW DEBT-TO-INCOME RATIO
Although lenders may be more flexible on this requirement if you have extensive cash reserves, for the highest chance of approval your debt-to-income ratio should be below 40%.
ADEQUATE CASH RESERVES
You should have enough cash available to cover at least one year of your jumbo mortgage payments. In addition, you should be able to put at least 10% down and cover higher closing costs.
For a jumbo loan, you’ll need to provide more documentation than you would for a traditional loan. Be prepared with tax returns, pay stubs, W2s and/or 1099s, and bank statements, as well as information on any other loans you’re paying off and liquid or non-liquid assets you own.
Review your jumbo loan options with HUNT Mortgage.
If you have a high income and are planning to purchase an expensive home, speak with one of our Mortgage Consultants about a jumbo loan and whether you might qualify. Contact us or request a quote today.