Jumbo Loans

November 7, 2019

Jumbo Loan Qualifications: What do I need?

jumbo loans, qualifying for jumbo loan

In 2003, Fortune Magazine coined the acronym HENRY (high earner, not rich yet). It describes the segment of the population having significant potential for future wealth. If you are considering a jumbo loan, there is a good chance you may be a HENRY.

High earners are typically defined by an annual income range of $250-500,000. The distinction from “rich” being that income is earned through working, rather than assets and investments. Professionals such as lawyers, doctors, and dentists are a great example. They have the discretionary income to afford mortgages above the conforming loan limit and the low DTI required to qualify for a jumbo loan.

I Have the Income. What Else is Needed?

Some jumbo loan requirements taken into consideration are the borrower’s credit score, cash reserves, employment status, debt-to-income ratio, and down payment.

Lenders are more likely to examine jumbo loan qualifications at a deeper level than they would a conventional mortgage. But that does not mean you have to ace the “what I need to qualify” checklist in order to consider a jumbo loan. You should work closely with a lender so they can tailor a loan program to best suit your situation.

Few Jumbo Loan Qualification Obstacles are Insurmountable

If you fall into the HENRY category, there is a possibility the required 6-12 months of reserves are not yet sitting in your bank account. A lender can take a look at how a lower DTI or higher down payment will qualify you for your jumbo loan.

Similarly, you may not have the lengthiest or strongest credit history. A trusted lender can often find a program with a higher interest rate for which you may qualify. Again, the size of the down payment will be factored in as well. A higher down payment usually grants some forgiveness for a lower credit score.

Gifted money is another consideration. Let’s say you recently finished your residency, and your parents sent you a very nice check in celebration. Your lender is the perfect person to help you decide how that money can be put toward a home. For example, a portion of gifted funds can be used to meet the reserve requirement. In some situations, this will be more helpful than allocating the gifted money for a down payment.

What Might My Situation Look Like?

The best starting place when considering a jumbo loan is to figure out how much you can afford. Then speak with a mortgage expert to find your best options.

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