Dare to Dream Big! How Do Jumbo Loans Work?

jumbo home loans

When you go home buying, you’ll find that there are many types of mortgages you can apply to in order to get the house of your dreams. To know for sure which one is the best for you can be a challenge, but if you’re looking for expensive homes, then you might find that regular mortgages aren’t enough to cover the amount of credit you’ll need to borrow. That’s what jumbo loans are for!

Most loans conform to Fannie Mae and Freddie Mac requirements, so they have a limit to how much they can lend you. Jumbo loans are special; they allow you to borrow a larger sum of money for a property. Because of that reason, they can’t be purchased, guaranteed or securitized by Fannie and Freddie. The jumbo loan threshold is $424,100 in most of the United States, though in the highest-cost areas loans have to go over $636,150 to reach jumbo territory (such as some counties in New York, Los Angeles, and San Francisco).

As you’ll be borrowing a much larger amount of money, you need to meet some special requirements to apply for jumbo loans. The first thing you should know is that you’ll have to show a much more rigorous credit history than if you were applying for a traditional loan. You’ll need a score of at least 700 and above and a super low debt-to-income ratio (under 43%).

Lenders generally ask for higher down payments as well and might require at least two appraisals. Depending on the lender, the down payment will be a 15%, 20% or 30% of the total amount, and they’ll also ask for 6 to 12 months’ worth of reserves in your bank account. You’ll also need to prove the source of your income and all your assets, present extensive documentation and full tax returns.

In the past, jumbo loans used to have higher interest rates because of the risks involved in lending so much money. However, nowadays the gap has been closing, and rates are not so different from traditional mortgages. The average annual percentage rate (APR) for a jumbo mortgage is often that of conventional mortgages, and in some cases, actually lower. Otherwise, banks may charge from 0.25% to 1.5% more interest on a jumbo loan.

Jumbo loans are a great chance for people who want to make big investments. If you want to learn more about them and their potential benefits, give us a call at Intercorp Mortgage Solutions. Jumbo mortgages are part of our offers, and they’re an excellent way to start building new assets in Florida. Start your new life today!


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Intercorp Mortgage Solutions

Phone Number: (305) 517-5633

8333 NW 53rd Street Suite 400.

Doral, FL 33166

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