Jumbo House? Let’s Talk Jumbo Loans.
When you start applying for a loan with Jumbo in the name, it can seem like there may be lots of boxes to check off in order to secure that jumbo house. That’s where the experts come in! To help make a big purchase no big deal!
Does my Jumbo House need a Jumbo Loan?
Your jumbo house will need a Jumbo Loan if its cost falls outside the conforming loan limit for the area. Once the conforming limit is surpassed, companies like Fannie Mae and Freddie Mac will no longer guarantee the loan and it will, instead, be backed by a private investor. The national conforming loan limit for 2022 stands at $647,200. However, in some areas like Nashville, there are higher limits to reflect higher living costs. Check out the 2022 conforming loan limits by county to see if your next purchase qualifies.
Qualifying for your Jumbo Loan
So your next purchase will be a jumbo house. What now? Because Jumbo Loans are for bigger amounts, they are a bigger risk for lenders. Therefore, lenders want to ensure that you are a trustworthy borrower and will protect the investment.
Like any big purchase, credit is key. Most Jumbo Loans require a minimum credit score of 700 to qualify. However, you may still be able to secure a Jumbo house with a 680 credit score, although you may trade your lower credit score for a higher interest rate.
Debt-to-Income (DTI) & Loan-to-Value (LTV) Ratios
The rule of thumb for DTI and LTV is that you want these values to be as low as possible.
Your DTI is the ratio of your existing debt and current income. If your DTI comes in at 35%, you’re in a great spot. And you may still qualify even if it reaches up to 43%.
LTV represents the ratio between your loan on your purchase and the value of your home. In general, the more you put down on your jumbo house, the lower your LTV will be. Ideally, an LTV of 80 will get you a better rate on your purchase.
Down Payment on a Jumbo House
Long gone are the days of having no choice but to put 20% down on a Jumbo Loan. At UHL, you can put 10% or even 5% down on a Jumbo Loan in some states.* These down payment options help our buyers to secure both a down payment and monthly payment that is affordable for them.
*Not available in all states. (5% down on loan amounts up to $1,000,000 available in IL, IN, IA, KY, MI, MN, OH, and WI)