Jumbo Loans: What you need to Qualify
In Chicagoland, a mortgage that exceeds $424,100 is considered a Jumbo, or nonconforming, Loan. Jumbo Loans are available for primary residences, second homes, and investment properties in a variety of terms, including fixed and adjustable rates. While the mortgage process for a Jumbo Loan is similar to a conforming loan, the approval requirements are a bit different. Here’s an overview of the main Jumbo Loan guidelines:
The standard Jumbo Loan down payment is 20%. If the loan amount is less than or equal to $650,000, there are some programs that allow as little as 5% down (or 10% down for loans up to $1 million) if you have the right credit score.
The standard credit score is 700 for Jumbo Loan approval, but for lower down payment options, you may need a higher score. Remember, the credit score listed on free sites such as Credit Karma is not the same score used by lenders. For a free copy of your credit report and FICO score, contact us here.
To qualify for a Jumbo Loan, your debt-to-income (DTI) ratio must be 43% or less, although some ARM programs go to 47%. Your DTI ratio is calculated by dividing your total monthly debts by your income before taxes. The lower your DTI, the less risky you are to a lender.
Of course, the best way to see if you qualify for a Jumbo Loan is to speak with a lender, and the team at United Home Loans just happens to be experts in Jumbo lending. Contact us here or at 708-531-8388 for information or a custom rate quote.