Does Your Upcoming Home Purchase Require a Jumbo Loan?
Purchasing a higher priced home may require a jumbo loan depending on where in the country the house is located. Typically, a conforming loan is limited to $424,100 except in areas where the average housing cost is significantly higher. If the home that you are looking to purchase is outside of Fannie Mae and Freddie Mac’s guidelines, you will need what is called a jumbo mortgage. This type of loan comes with its own set of requirements and lending guidelines. A 30 year fixed jumbo mortgage will require a strong credit profile as well as a lower loan-to-value Ratio.
Credit Strength Required
A 30 year fixed jumbo mortgage is usually only available to consumers with a strong credit score around 680 or higher. A larger minimum down payment will also be required. These requirements are fairly standard between lenders, which makes it difficult for potential borrowers with a less than stellar credit history to obtain a 30 year fixed jumbo mortgage.
Home Valuation and Loan-to-Value
As with any mortgage, a home appraisal will be required. The maximum loan amount available will be around 70% and sometimes as high as 80% of the appraised value. If you are looking to finance an expensive home, take the time to ensure that you will qualify for jumbo mortgage prior to beginning the application process.
Exceptions to the Rule
In some areas where property values are much higher than the national average, In these areas it is possible to obtain a conforming mortgage up to $636,150 and a FHA loan up to $721,050. The application process and credit profile necessary to obtain a non-conforming loan make it worthwhile to first check for the conforming loan limit in your area. Interest rates for jumbo or non-conforming loans can be as much as 20 to 25 basis points higher than conforming mortgages.
If you require a non-conforming mortgage, be prepared for a higher down payment and a higher interest rate than if you were in need of a conforming mortgage.
If you are interested in a 30 year fixed rate jumbo mortgage, take a look at our GetMoney.com/fixed-rate-mortgage page to learn more about jumbo loans and our application process. We can pair you with the perfect lender in no time!