Jumbo Loans, What are they?

Jumbo loans were created for loans that go over the normal limit set by Frannie Mae and Freddie Mac. You can obtain jumbo loans at most places that offer conventional loans, but not always. Jumbo loans can be difficult to receive compared to other types of loans, but it is not impossible. Jumbo loans are usually used when financing a "luxury" home. The mortgage of the home usually has to exceed $417,000 to qualify for a jumbo loan. These types of loans will have a higher interest rate and also a higher down payment, but that is not always required.

Types of Jumbo Loans

There are two types of jumbo loans, jumbo loans and super jumbo loans. Jumbo loans range anywhere about the conventional loan limit to one million dollars. A super jumbo loan is anything above that one million dollars. The loan limits will change year-to-year depending on the change of conventional loan limits as well as the Frannie Mae and Freddie Mac guidelines. A second mortgage is also offered by many jumbo lenders, for anyone that needs a little extra help.

Qualifications for a Jumbo Loan

These loans can be offered as fixed-rate or adjustable-rate. To qualify for a jumbo loan, a persons credit score must be higher than 700 and their debt-to-income ratio must be less than 43%. Two appraisals are also required instead of one when it comes to a jumbo mortgage. If you are looking to qualify in areas such as New York City, LA or San Francisco, the max loan limit goes up to around $626,500. The limit is even higher is Hawaii and Alaska. Jumbo loans are good for someone looking to buy a higher-priced home around the county. Generally, the qualifications for a Jumbo Loan are the same as Conforming loans, for example, lenders still look at your credit score and debt to income ratio but these things are looked a more closely considering there is more money being borrowed for a jumbo loan. You are still required to show 2 years of employment history to show proof of financial stability.