Jumbo Loans

What is a Jumbo Home Loan?

If you're looking to purchase a home that exceeds the Conventional limits in your area, a Jumbo home loan may be the right option for you. With a Jumbo loan, you can finance a property up to $3 million dollars. On November 30, the FHFA announced new Jumbo mortgage limits. To qualify for a Jumbo loan in 2022 most counties require a loan amount greater than $647,200, which is an increase of $98,950 from the prior year.

Jumbo Loan Vs. Conventional Loan?

The critical difference between a Jumbo home loan and a Conventional home loan is the amount of the mortgage. A Jumbo home loan is for mortgages that exceed the Conventional limits, while a Conventional home loan is for mortgages up to $647,200. Due to their inherent risk, Jumbo loans typically have stricter qualifying requirements such as a higher credit score and more reserves. Additionally, unlike Conventional loans, Jumbo loans typically do not require the borrower to have private mortgage insurance, no matter the down payment amount.

What are the Requirements for a Jumbo Home Loan?

In order to qualify for a Jumbo home loan, you'll need a good credit score and substantial reserves. Jumbo loans typically have stricter qualifying requirements than Conventional loans, so it's important that you meet all the requirements before applying.

• Credit Score: You'll need a good credit score to qualify for a jumbo home loan. A FICO score of 680 or above is generally considered good, but the higher your score, the better your chances of qualifying.

• Reserves & Assets: Jumbo loans typically require more reserves than Conventional loans. Reserves are the funds you have available after closing, and they can come from your savings, investments, or other sources. Typically, you'll need six months' worth of mortgage payments in reserves to qualify for a jumbo loan.

• Low Debt-to-Income Ratio: Since jumbo loans have more associated risk, you will be required to have a lower debt-to-income ratio. Having less monthly debt obligations can help a lender determine your ability to repay the loan.

• Higher Down Payment: A down payment is typically required for a jumbo home loan. Jumbo loans require down payments of 10% or more, so it's important to have the funds available when you're ready to buy.

• Property Type: Not all properties are eligible for a jumbo home loan. In order to qualify, the property must be a single-family home, condo, townhome, or 2-unit. It cannot be a 3–4-unit property or a commercial property.

• Second Appraisal:  A jumbo loan may require a second appraisal on the subject property to evaluate the home’s actual value and make sure it aligns with the anticipated loan-to-value.

Are There Restrictions on What I Can Use My Jumbo Loan For?

No, there are no restrictions on what you can use your jumbo home loan for. You can use your loan to purchase a single-family home, condo, townhome or 2-unit property. You cannot use your loan to purchase a 3–4-unit property or a commercial property.

What is the Process for Obtaining a Jumbo Home Loan?

The process for obtaining a jumbo home loan is similar to the process for obtaining a conventional loan. You'll need to complete a mortgage application, provide documentation of your income and assets, and go through a credit check. The difference is that jumbo loans typically have stricter qualifying requirements than Conventional loans, so it's important to meet all the requirements before applying.

If you're considering a jumbo home loan, be sure to contact Onshore Mortgage to learn more about the process and how to qualify.

*Credit and income restrictions do apply. Please visit our Disclosures page for a detailed breakdown of all loan types.