A home loan is considered a jumbo if it exceeds what is known as the conforming loan limit. Qualifying for a jumbo loan usually requires lower debt-to-income ratios, higher credit scores, and larger down payments. They also require higher reserves (or emergency funds) than conforming loans. Drew Mortgage Associates offers many options on jumbo loans.
Jumbo Home Mortgage Lenders in MA
A jumbo loan is a home loan program that exceeds the conforming loan limits set out by the Federal Housing Finance Authority (FHFA), currently $484,350 in most areas, although some high-cost areas may be eligible for conforming loan limits up to $688,750. Proceeds from a typical jumbo mortgage are used to purchase luxury homes. The borrower must demonstrate qualifications that include financial ability to provide larger down-payments, demonstrate lower debt-to-income ratios, and be subject to stricter credit approvals.
Jumbo Home Mortgage Lender
Because of their nature, jumbo loans come with more requirements and qualifications that must be met by the borrower. The borrower must have an excellent credit rating as well as much more financial strength. Down payments must be higher than with conventional mortgages, and are often set at 20 percent of the purchase price. The home that the borrower is purchasing must also be appraised at an appropriate amount – the appraisal must support the purchase price and the lower loan-to-value requirements. In some cases, because of the dollar amounts that come with a jumbo loan, lenders may require two appraisals to be performed rather than just one.
Jumbo home mortgage rates also carry more risk than conventional loans. This is primarily because of their size and the fact that they’re used to purchase luxury homes, which are far more prone to the ups and downs of the housing market than standard homes. Along with the additional risk, jumbo loans rates also carry higher interest rates than conforming loans, as the risk extends not just to the borrower, but to the lender as well.
If you’re in the market for a large or luxury-market home, a jumbo loan might be the right solution for you.