Below we discuss the basics of jumbo loans, each state’s loan limits, who is eligible to get jumbo loans, and how to get one!
What is a Jumbo mortgage?
A jumbo mortgage is a loan that allows homebuyers to buy luxury homes or higher-priced properties. They are named “jumbo” because they exceed the limits specified by the Federal Housing Finance Agency (FHFA).
The amount of a jumbo loan varies by county and state, and it changes annually! So it’s essential to understand and study the limits of your area when you are thinking of getting a jumbo loan.
What are the Jumbo loan limits by each state?
A jumbo mortgage is a loan that exceeds a specific amount, called the conforming loan limit. The conforming loan limits are computed based on the location’s home prices.
Last April 2022, the Federal Housing Finance Agency (FHFA) announced that the conforming loan limit in most counties in the U.S is $647,200 and $970,800 in higher-cost areas for 1-unit properties. This could benefit transferees looking to relocate who need some additional buying power.
If you want to look up current limits by each state, visit the FHFA’s website.
Who are eligible for a jumbo loan?
Jumbo loan requirements vary by mortgage brokers. To determine if you qualify for a jumbo loan, you must have:
Outstanding credit scores: Usually, the minimum credit score required for a jumbo loan should be 680, and sometimes as high as 760.
Low debt-to-income ratios: Your lower debt-to-income ratio should be no higher than 43 percent; some lenders have a 45 limit. The lower your DTI is, the better.
Cash reserves: Some lenders will look at how much cash you have on hand to guarantee you have sufficient cash reserves to cover one year of mortgage payments.
Larger down payments: The amount is usually 25 percent or 30 percent. This is higher than the traditional 20 percent down payment.
Where to get a jumbo loan?
Whether you want to purchase a luxury home or a large property, seeking advice from an experienced mortgage advisor is essential.
Belay Mortgage Group is a mortgage company in Vancouver WA. The experienced mortgage brokers here will help you understand your current financial situation and assist you in building your future financial plans.
If you’re interested in taking out a large loan, contact Belay Mortgage Group here so you won’t miss any critical information.