Jumbo Loans

Most Common Jumbo Loans Questions

• What is a jumbo loan?

A jumbo loan is a mortgage loan that exceed the conforming loan limit determined by Federal Housing Finance Agency (FHFA). Jumbo loans can also be referred as non-conforming loans because they do not conform to these determined limits. Jumbo loans are available through private lenders, such as banks, credit unions, and mortgage companies. You can use a jumbo loan to buy, refinance or renovate a home.

 

• Do jumbo loans have specific eligibility requirements?

Due to the fact jumbo loans do not have standardized loan features and eligibility requirements, they do not meet the criteria set by Fannie Mae and Freddie Mac, which are Government Sponsored Enterprises (GSE). Therefore, jumbo loans will adhere to their own specific guidelines, which can be more restrictive in many ways like requiring higher credit scores, requiring lower debt-to-income ratios (DTI), and requiring more down payment.

 

• Do jumbo loans have higher interest rates?

Interest rates on a jumbo loan can typically be the same or in some cases better than a conventional loan. This is because the more restrictive guidelines can offset some of the risk that lies on the private lenders, banks, credit unions and/or mortgage companies. Ultimately, the rate obtained will depend on the lender and the current market conditions.

 

• Do jumbo loans have additional fees and/or costs?

Jumbo loan does not require additional fees and/or costs much like government-insured loans require. However, because a jumbo loan has more restrictive guidelines, you must be prepared meet to those requirements which can include more down payment.

 

• How do you know if a conventional loan is the best loan for me?

Everyone’s financial situation can be different due to numerous factors. Although a jumbo loan may seem the most logical, it doesn’t make it the best loan for you as there may be other options to consider. A jumbo loan can be a great, but to ensure you choose the loan that is right for you, it is important to speak with a mortgage professional to discuss your specific situation in detail. Contact me to begin this conversation.