Jumbo mortgages are not like conventional home loans and are designed to finance luxury properties and homes in very competitive real estate markets. But what exactly are they, who can use them, and how do they work? Let’s take a look in our guide to jumbo mortgages – read on to find out more.
What is a Jumbo Mortgage?
A jumbo mortgage is essentially an unconventional home loan for amounts that are more than the conforming loan limit that is set by Fannie Mae and Freddie Mac. At the moment, that limit is $435,100, and if your mortgage is worth more than that, then the reality is that neither of these organizations will purchase that loan. In cases such as these where the mortgage is higher than the limit, you may need to look for a jumbo loan.
What types of jumbo loan are there?
Depending on where you get your jumbo mortgage from – and your own financial and personal position. With Good To Go Mortgage, for example, you might be eligible for a 10% down, 5% down, or long-term (up to 40 years) loans. Veterans can also get a Zero Down on VA Jumbo loans.
What do you need to get one?
The criteria for getting a jumbo mortgage is pretty high. You will need an excellent credit score for starters – a minimum rating of 620, and the higher your score, the better. Your past record needs to be clean as well, so you can’t have any prior short sales or bankruptcies over the last four years. Some jumbo loans are only available for first-time buyers and qualifying military veterans, too.
Who are jumbo loans best for?
If you are a high-earning professional person – such as a lawyer or a doctor – you may well have a strong income and be looking for a home that is well outside of the Fannie Mae and Freddie Mac limits. But if you don’t have a large and significant deposit, it’s going to be difficult to find a traditional mortgage – especially in the current financial climate. One of your solutions is the jumbo mortgage, so you can buy your high-value home with a low down payment, and keep your funds in your business.
How much can I borrow?
The amount you can borrow is dependent on the usual things lenders look for from a borrower. We’ve discussed an excellent credit rating already, of course, but lenders will also take into account things like your assets and the value of the property you intend to buy.
Are jumbo mortgages more expensive?
Because you don’t pay as big a deposit on a jumbo mortgage than you do with a traditional home loan, it follows that it will be more expensive in terms of interest. However, in recent years there has been a significant reduction of this gap – and in some cases, a jumbo mortgage may be even lower.
If you would like more info about jumbo mortgages, please get in touch with Good To Go Mortgage to find out everything you need to understand to take the next step.