If you’re considering purchasing a home and need financing above the conforming loan limits, a jumbo loan might be the right option for you. A jumbo loan is financing above the limit set by the Federal Housing Finance Agency for a conforming loan. However, because jumbo loans aren’t backed by a government loan agency like Fannie Mae or Freddie Mac, qualifying may be more difficult than for a conforming 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 680. This requirement can vary and increase based on the loan amount and loan-to-value ratio.
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 at least 45% or lower.
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 loans up to $900,000 and 20% down for loans up to $2 million.
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 need financing above the current conforming loan limit of $726,200, then speak with one of our Mortgage Consultants about a jumbo loan and whether you might qualify. Contact us or request a quote today.