Jumbo home loans are possibly the most generous home loans available. Available with a fixed or adjustable interest rate, they offer borrowers amounts above $484,350, which is the conforming loan limits set by Fannie Mae or Freddie Mac for 2019.
Benefits of Jumbo Home Loans
Unlike conforming loans, jumbo loans can cover up to 80% of the property’s value, or offer millions to qualified borrowers. It also spares individuals with a hefty income from having to secure multiple conventional loans. First time buyer mortgage borrowers can easily get all the funds they need in one go.
Some lenders provide additional perks with their loans. For instance, you can get a jumbo 30 year fixed mortgage in California with no private mortgage insurance. These incentives make jumbo loans deliver more value to future homeowners.
Eligibility Criteria for Jumbo Loans
As this type of loan is larger and riskier for lenders, its criteria are stricter than other first time buyer mortgage products. To be eligible, you need to have the following:
High Credit Score – You need to have at least a credit score of 700 to qualify. Some lenders will go as high as a 720 FICO score to protect their investments.
Ample Cash Reserves – Lenders will be more flexible if you have sufficient cash reserves which can cover your mortgage payments for a year.
Documents Proving Financial Health –You’ll need to provide more documentation than you would for a regular 30 year fixed mortgage in California. From tax returns to W2s and 1099s, prepare all the documents which indicate you’re financially healthy.
A Second Home Appraisal – You may need to spend a little extra money to get a second appraisal of the property you wish to buy.
Be Forewarned - Getting Jumbo Home Loans Isn’t Easy
As tempting as it sounds, a jumbo home loan pre approvalis a little more difficult to get because:
This type of loan isn’t offered by all banks or lenders.
Underwriting guidelines can be different from vendor to vendor.
Loan qualification criteria are quite strict, especially credit score criteria.
At least a 10% down payment will be required.
If you think this home loan is perfect for you, get in touch with a reputable broker and discuss your options. You’ll even get an idea of how much you can borrow after a home loan pre approval.