A jumbo loan is a type of mortgage loan that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). These limits vary by location but generally apply to loans that are above a certain amount, typically higher than the standard loan limits for conventional loans.
Here are some key features of a Jumbo Loan:
Jumbo loans are designed for borrowers who need to borrow a larger amount of money to finance their home purchase. The loan amount for a jumbo loan is typically higher than the conforming loan limit set by the FHFA, which is $726,200 for most areas in the United States in 2023. In high-cost areas, the limit can be higher.
Jumbo loans usually require a larger down payment compared to conventional loans. While the exact down payment requirements can vary depending on factors such as credit score and lender policies, a down payment of at least 10-20% of the home's purchase price is common.
Jumbo loans generally have stricter credit requirements compared to conventional loans. Lenders typically look for borrowers with a strong credit history, high credit scores, and a low debt-to-income ratio.
Jumbo loans often come with slightly higher interest rates than conforming loans due to the greater amount of risk involved for lenders. However, interest rates can vary depending on market conditions, loan-to-value ratio, and the borrower's financial profile.
Documentation and Income Verification
Jumbo loans may require more extensive documentation and income verification compared to conventional loans. Lenders may ask for additional financial statements, tax returns, and proof of assets to ensure the borrower's ability to repay the loan.
Jumbo loans offer various loan term options, typically ranging from 15 to 30 years. Borrowers can choose the term that best suits their financial goals and repayment capabilities.
Due to the higher loan amounts and stricter criteria, obtaining a jumbo loan can be more challenging than getting a conventional loan. It's advisable to work with a knowledgeable mortgage lender who specializes in jumbo loans to navigate the process effectively. Call one of our JUMBO experts at Castle Rock Mortgage, LLC today.