Jumbo Mortgage Loans

What's a jumbo mortgage loan?

Jumbo mortgages are home loans that exceed conforming loan limits. A jumbo loan is one way to buy a high-priced or luxury home. If you have a lower debt-to-income ratio, a higher credit score, and a larger down payment, a jumbo loan may be right for you.

The limit on conforming loans is $424,100 in most areas of the country, but jumbo mortgages can exceed these limits. Even so, if you're considering a home in a high-cost area, you may still be able to obtain a conforming fixed-rate mortgage or adjustable-rate mortgage for up to $636,150. FHA loans have limits up to $729,750. Contact a mortgage loan originator to learn more.

Benefits and Considerations

Higher Purchase

Limits Jumbo mortgages can exceed the conforming loan limit, currently $424,100 in most parts of the United States.

Competitive Rates

Jumbo loan rates have reached historic lows in recent years, and the interest on loans up to $1 million may be tax-deductible.

Second Mortgage

Many jumbo mortgage lenders may allow you to take out a second mortgage for a combined loan-to-value ratio of up to 90 percent.

Requirements and Qualifications

* Credit history – Conventional loans are a good choice for borrowers with very good credit, which generally means a FICO score of 700 or higher.

* Financial strength – When applying for a jumbo mortgage, the maximum debt-to-income ratio for jumbo for loans is 45 percent, and the required reserve amount for jumbo loan borrowers can be as high as 20 percent of the value of the loan.

* Down payment – There is no private mortgage insurance option with a jumbo mortgage, so the required down payment will be larger - typically 20 percent.

* Property appraisal – The property appraisal must support the purchase price for the home and the mortgage the borrower wants.

Jumbo mortgages are a good solution for borrowers who are looking to buy a higher-priced home. Contact a mortgage loan originator to find out whether a jumbo loan may be right for you.