Do you want to buy a house in a more affluent community? If that’s the case, you have to know that a conforming mortgage loan might not be adequate. However, before you give up hope, keep in mind that you still have choices for purchasing the home of your dreams.
If you require a larger loan than the local conforming loan limit and don’t have the cash flow to put down a higher down payment, jumbo loans may be a viable alternative for you. Here’s all you need to know about jumbo loans.
What Are Jumbo Loans?
A jumbo loan, often known as a jumbo mortgage, is a loan that exceeds the Federal Housing Finance Agency (FHFA)’s borrowing restrictions. They are considered non-conforming loans because they cover a larger-than-normal loan amount.
Because jumbo mortgages don’t come with the same assurances as conforming loans, applicants are subject to more scrutiny and may face higher borrowing rates. A jumbo loan may appeal to investors who aren’t normally interested in regular mortgage bonds. It can be used for primary homes as well as for investment properties and vacation homes.
How Can I Get a Jumbo Loan?
Jumbo loans, like conventional mortgages, come in a wide range of terms and repayment schedules, largely depending on your lender. It can either be fixed-rate or adjustable-rate. However, you must first meet certain requirements which are usually stricter and more selective than regular loans.
To begin with, jumbo loans are designed for people who earn a lot of money but do not yet have millions of dollars in cash or other assets. They are suitable for people with yearly earnings between $250,000 and $500,000.
Martha Walters of New Frontier Financial Inc. quoted “Aside from that, jumbo loans usually need a considerably larger down payment than conforming loans. For jumbo loans for single-family properties, lenders frequently request at least a 20 percent down payment.”
Furthermore, when applying for a jumbo mortgage, your credit score plays a significant role. FICO scores must be higher to qualify for a jumbo loan. The typical credit score is approximately 740, but a credit score of 700 will qualify you for a home with a loan maximum of $1 million. Finally, when applying for a jumbo loan, a low debt-to-income ratio is critical since it assures lenders that you will be able to handle your mortgage payments for years to come.
What are the Limits of a Jumbo Loan?
In much of the country, the conforming loan ceiling for Fannie Mae and Freddie Mac is $548,250 in 2021. In more costly locations, however, borrowing restrictions are significantly higher. The loan maximum is $822,375 for much of California, New York, and Washington, D.C.
What Properties Can I Get with a Jumbo Loan?
Because there are no government limitations on how you may utilize your jumbo loan, you can acquire a wide range of properties. Most jumbo mortgages can be used for primary residences, vacation homes, and investment properties as long as you fulfill your lender’s other requirements.
Home Buying in Dallas With New Frontier Financial Inc.
Jumbo loans have several advantages, and they are sought after by many people who want to live more comfortably. However, not everyone is eligible for it. If you have any questions, you can always seek the guidance of local mortgage specialists who can provide you with knowledge on how to secure the loan.
If you are looking for jumbo loans in Dallas or anywhere in Texas, New Frontier Financial Inc. is here for you. We actually have a program with as little as 5% down payment on a Jumbo Loan. We are a full-service Mortgage Broker Service, and we are excited to help you achieve your goal to purchase or refinance a home or invest in TX real estate. Talk to us now by calling (469) 886-8300.