Jumbo Loan Down Payments, Jumbo Loans FAQs

Jumbo Loan Down Payments, Jumbo Loans FAQs

When you look for a jumbo loan, and the details about jumbo loan down payment options, you may have a lot of questions. This Frequently Asked Questions list is designed to cover what you need to know before making a decision about a jumbo loan, or a jumbo loan down payment.

  • Do I need to get a jumbo loan?

  • What is the difference between a conforming mortgage and a jumbo loan?

  • Will I be approved?

  • How is the jumbo loan down payment calculated?

  • Do I need mortgage insurance?

Do I need to get a jumbo loan?

You need a jumbo loan if your loan amount is higher than conforming loan limits in the area. That limit is usually $453,100. In some higher-cost areas of the country the limit is $721,000.

What is the difference between a conforming mortgage and a jumbo loan?

The lender usually holds jumbo loans directly. This means that Freddie Mac and Fannie Mae are not involved, since GSEs only accept conforming mortgages.

Will I be approved?

The requirements are stricter for jumbo loans. You will need a solid credit rating of about 700, adequate cash reserves to show you could make the loan payment for several months, at least a couple of years of income validation (tax forms usually), and a jumbo loan down payment amount.

How is the jumbo loan down payment calculated?

There are several factors involved in determining the jumbo loan down payment amount. For a Jumbo Loan 10 Down option, the jumbo loan down payment is a simple calculation of 10% of the purchase price of the property. For properties valued at over $1 million, some clients prefer to increase their down payment on jumbo loan amount to bring the value of the mortgage below the $1 million IRS tax deduction maximum limit. Every jumbo loan down payment calculation is based on the unique situation of the client, so there are several options. Discuss the options for your jumbo loan down payment with your financial representative.

Do I need mortgage insurance?

Maybe. A jumbo loan is a non-conventional loan. These are not covered by insurance from the US government.  They can not be sold to a GSE such as Freddie Mac or Fannie Mae. If the LTV (loan-to-value) rate is more than 80%, you will need mortgage insurance. Ask your financial representative about the details, based on your unique situation. A jumbo loan down payment increase can often make a difference in the mortgage insurance requirement.

There are many more questions you will want answered when making a decision about a jumbo loan and your jumbo loan down payment choices. If you have already started looking at real estate, or if you are just thinking about starting to look, it is time to call (800) 720-2515  or email us to discuss your options.

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