Have you ever wondered what the difference is between the various mortgage loan types? Or were you unaware that there are many types of loans meant to address specific borrower needs? Just as no two borrowers are exactly alike, no two loan programs are set up precisely the same way.
If a loan amount is greater than the “conforming” standards set by Fannie Mae, it is a jumbo loan.
What is a jumbo loan?
While it varies by the market area, loan amounts above $453,100 are typically treated as jumbo loans. These loans are considered to be risky investments by lenders, regardless of the creditworthiness of the borrower, and this risk is generally balanced by a higher interest rate and a larger down payment than most conforming loans. While these types of loans may cost borrowers a bit more, their availability expands credit opportunities for high-priced properties.
Jumbo Guidelines and Requirements
As with any loan product, there are a variety of factors that must be met when applying for a jumbo loan. Here are a few features you can expect from jumbo loans:
- Down payment requirements for jumbo loans vary, but typically 20%-30% is required as a down payment for primary residences.
- Loan amounts that are considered jumbo differ by area. If you are thinking of borrowing more than $453,100, talk to a qualified loan officer to find out if you need a jumbo loan.
- Jumbo loans are available for primary residences, second homes and investment properties.
- The maximum loan amount that is possible varies based upon the size of the down payment and the credit history of the borrower.
- In almost all cases, income must be fully documented, and debt-to-income ratios are based upon the type of transaction—purchase, refinance or cash-out refinance.
Is a jumbo loan the right loan for me?
There are many variables when it comes to jumbo loans. It helps to have a knowledgeable loan officer by your side. A good loan officer will listen to your needs, evaluate your specific situation, educate you on different loan products and help you select the right loan for you.
Interested in talking to a loan officer about your borrowing options? Find a licensed Castle & Cooke Mortgage, LLC loan officer near you, or call toll-free (866) 461-7101 today!
Castle & Cooke Mortgage, LLC® (NMLS #1251) is a leading independent mortgage lender headquartered in Draper, Utah, with locations across the United States.
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Information contained in this this Blog does not constitute legal, financial, or other professional advice or services and should not be used as a substitute for professional advice. The purpose of the Blog is to provide Castle & Cooke Mortgage, LLC’s opinions and general guidance on certain matters related to mortgages. The reader accepts full responsibility for use of the information contained herein.