A Jumbo home loan is any loan that exceeds the conventional loan limit for any geographic area. Here in the Phoenix metropolitan area, the conventional loan limit is $424,100, meaning that any loan above that dollar amount would be considered a Jumbo Home Loan.
What Makes Jumbo Home Loans Different
In today’s mortgage market, almost all of the loans offered by lenders are at least somewhat government backed, with VA, FHA and USDA loans being specifically government backed and Conventional loans being semi government backed.
Jumbo loans are different however, as each mortgage lender, bank and financial institution is free to set their own standards when it comes to Jumbo loans.
With that in mind, this article will address some of the standards currently in place for Jumbo loans, but these standards will vary from lender to lender.
Down Payment Requirement
Here is where things have really opened up in recent years, as it is now possible to obtain a Jumbo home loan for a primary residence, with as little as a 5% down payment. As your down payment increases, the interest rate offered will be lower. However, Jumbo home loans do not have mortgage insurance, so it is not necessarily needed to have a 20% down payments.
Credit Score Requirements
If you are looking to apply for a Jumbo home loan, credit scores are even more important than any other loan type. In general, you will need 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 760 or higher.
Home Loan Limits
In general, there are no loan limits when it comes to a Jumbo home loan. However, as loan amounts increase over certain threshold ($1 million, $2 million and $5 million for example), then the standards also become a little stricter for qualification as well.
Another area that is unique to Jumbo home loans, is that on top of down payment, lenders will require additional assets, sometimes equal to 12 months of payments or more, available after down payment.
However, you can use items such as retirement, investment or 401k accounts, to satisfy the asset requirements for Jumbo home loans.
Waiting Periods After Foreclosure, Short Sale or Bankruptcy
Jumbo home loans will look closely at your credit history and generally require a minimum of four years after the completion of a short sale and seven years after the completion of a foreclosure to obtain a new conventional loan. In addition, there is also generally a four year waiting period after the discharge of a chapter 7 bankruptcy to obtain a jumbo home loan.
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 licensed 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) 219-3682 or by emailing: email@example.com or online at www.strategicmtgaz.com
Strategic Mortgage, LLC - AZ BK#0909514 - NMLS#158804 - Equal Housing Lender – Vasilios Bill Kamboukos Jr – NMLS#160440