Section 2: Am I Eligible for a JUMBO Loan
Eligibility For a Jumbo Loan
In general, Jumbo loans are a type of mortgage product designed for higher-priced homes. They’re typically reserved for buyers with good credit, steady income, and a good amount of cash reserves. Because Fannie and Freddie do not set the requirements for jumbo loans, lenders have some leeway with their eligibility standards. That being said, they’re typically more difficult to qualify for due to the heightened risk they come with. Because jumbo loan standards vary by lender, they have to be manually underwritten, which can sometimes make the loan process more complicated. You can expect a little more back-and-forth with your loan officer (and usually more documentation) when getting a jumbo loan.
*Don’t meet the minimum requirements? You still may be eligible: talk with an Orbit Home Loan specialist today. (CLICK)
Down Payments
Some lenders break down their requirements by loan type, so you’ll need to meet different standards if you’re buying a home, refinancing, buying an investment property, or doing a cash-out refinance. Jumbo loan requirements can vary greatly depending on the lender you choose. Here are some typical examples of the requirements for each type:
Home purchase
- Min. down payment: 10% for homes under $1.5 million; up to 40% for homes over $1.5 million (possibly higher for first-time homebuyers)
- Min. credit score: 680 to 720 depending on your down payment
- Max DTI: 40%
Refinance
- Equity required: 20% for homes under $1.5 million; up to 40% for homes over $1.5 million
- Min. credit score: 680
- Max DTI: 43%
Cash-out refinance
- Equity required: 20% to 30%
- Cash available: $350,000 to $750,000, depending on your equity stake
- Loan limits: $1 to $2 million, depending on your equity stake
Investment properties
- Min. down payment: 40%
- Loan limits: $1 million
- Min. credit score: 720 to 760
- Max DTI: 43%
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Documents Your Lender May Require
- W2s or 1099’s
- Bank Statements
- Pay Stubs
- Asset Statements
- Liability Statements
- Legal ID
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Jumbo Lender Requirements
Credit and Income
Jumbo loans come with more risk than conforming loans. For one, they’re not guaranteed by Fannie Mae and Freddie Mac, which means the lender can’t sell the loan to Fannie or Freddie later on. On top of this, the balance is also higher than a conforming mortgage, which means more financial loss for lenders if you fall behind on payments. To compensate for these added risks, lenders will sometimes charge higher interest rates to jumbo loan borrowers. However, you might be able to find competitive jumbo loan rates as long as you shop around.
Jumbo loans are designed for higher-priced properties. They come with more stringent qualifying requirements, which could sometimes mean higher monthly payments and higher interest rates. Because of this, they’re best reserved for buyers with good credit, consistent income, and lower levels of debt.
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How to Apply for a Conventional Loan
Get started today with one of the best and most secure ways possible. Here are Orbit Home Loans we have a trusted team ready to help you find your dream home. Talk with you trusted Orbit Home Loans broker that knows Jumbo loans and how to get the most from this hard-earned benefit. The process typically starts with getting pre-approved, which can often be done in minutes using your phone, laptop or tablet.
Loan pre-approval is a key first step before making an offer on your dream home. Having that pre-approval letter gives you a clear sense of your buying power and shows sellers and listing agents you have what it takes to get to closing.
Questions about whether you qualify? (CLICK)