Any loan that exceeds the conventional loan limit, is considered to be a Jumbo home loan. Here in the Phoenix metropolitan area, we are not considered a “high cost” metropolitan area and so the conventional loan limit is $484,350.
That means if you want to take out a loan above that limit, no matter what your down payment is, that new loan is considered a Jumbo loan. This article will discuss some of the basics about Jumbo home loans.
Jumbo Loans – Are Not Government Backed Or Insured
Almost all home loans have some sort of Government backing (conventional loans) or are insured by the Government (FHA, VA and USDA loans). However, Jumbo loans are all essentially backed and insured, solely by the financial institutions who provide the loans.
That means that while generally most lenders will have similar standards for conventional loans, they can vary wildly for Jumbo home loans. For this reason, it’s very important to find the right lender to obtain a Jumbo home loan.
Jumbo Loans - Down Payment Requirements
In today’s marketplace, you can make as little as a 5% down payment on a Jumbo home loan, for a primary residence. Jumbo loans also do not have mortgage insurance associated with them. However, the more down payment you provide, the lower your interest rate will be.
Jumbo Home Loans - Credit Score Requirements
If you are looking to apply for a Jumbo home loan, credit scores are vitally. Generally speaking, most lenders would like to see a 680 credit score or higher, just to be eligible for a Jumbo home loan. And to truly obtain the best interest rate on a Jumbo home loan, you will want a credit score of 740 or higher.
In addition, lenders look for at least seven years since a foreclosure and four years since a bankruptcy, to obtain a new Jumbo loan.
Jumbo Home Loans - Loan Limits
In reality, there are no loan limits when it comes to a Jumbo home loan. However, as loan amounts increase over certain threshold ($1.5 million, $2 million and $5 million for example), then the standards also become a little stricter for qualification as well.
Jumbo Home Loans - Asset Requirements
Jumbo home loans will also generally require additional assets on hand (liquid funds on top of your down payment). These numbers will vary by lender, but generally, once you exceed $1 million dollars on a loan amount, the lender will want to see up to 12 months of payments as assets.
However, you can use items such as retirement, investment or 401k accounts, to satisfy the asset requirements for Jumbo home loans.
These are some of the basics you need to know about Jumbo home loans in today’s market place. However, everyone’s individual situation is unique and it is always best to speak with a trusted lender, such as Strategic Mortgage and explore all available options, for your specific situation.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 703-5844 or by emailing: bill@strategicmtgaz.com or online at www.strategicmtgaz.com
Strategic Mortgage, LLC - AZ BK#0909514 - NMLS#158804 - Equal Housing Lender – Vasilios Bill Kamboukos Jr – NMLS#160440
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