Purchasing a Home? Here’s When to Consider a Jumbo Mortgage Loan

When to Consider a Jumbo Mortgage Loan

A “jumbo mortgage loan” is used when the amount a borrower requires is greater than the conforming loan limits that have been established by Federal National Mortgage Association or FNMA (Fannie Mae). In other worse, these loans are meant to help homebuyers purchase a home that may have otherwise been out of their reach.

If you’ve ever asked “what is a jumbo mortgage loan,or if you want to figure out if this an option worth pursuing, then Poli Mortgage is here to help! 

When Would I Want a Jumbo Mortgage Loan?

Purchasing a home is a big decision, and sometimes you need a little extra help to get the kind of home you’re looking for. This is what jumbo mortgage loans are for. Like TheBalance.com says, “they’re for financially secure borrowers buying homes that are more expensive than average.” 

Instead of using a jumbo mortgage loan to try and buy more house than you’re equipped for, these loans are meant to make up the difference when a conventional conforming loan can’t meet your needs. In most cases, the maximum amount for a conforming loan is around $480,000, meaning that any mortgage loan that surpasses that number would qualify as a jumbo mortgage loan.

But when is it a good time to consider this kind of mortgage? While it’s usually a good rule of thumb to purchase a home that’s within your budget, sometimes your dream house requires just a little bit more than a conforming loan can cover. Or, if you’re purchasing a home in a “high-cost” area, then you may need a jumbo mortgage loan.

These aren’t traditional loans, so they probably shouldn’t be an option you pursue right-off-the-bat. But when the situations call for it, and when you have the means for it, then you may find that jumbo loan rates are a better option, regardless of the pros and cons of fixed-rate mortgages and adjustable-rate mortgages.

How Do You Qualify for a Jumbo Mortgage Loan?

However, since these loans don’t conform to the standards determined by the Federal Housing Finance Agency, qualifying for them can be slightly challenging. For example, as US News says, you’ll usually “need to meet, and in some cases exceed, the standard requirements for a conforming mortgage” and you’ll likely need to have a credit score of 700 or higher (although there are exceptions).

Some other jumbo loan requirements, as listed by NerdWallet, include things like:

  • A debt-to-income (DTI) ratio of approximately 43%
  • Having enough cash reserves to cover one year of mortgage payments
  • Proof that you’re financially healthy (via documentation such as W-2s, 1099s, bank statements, full tax returns, and information on any investment accounts) 
  • Potentially having a second appraisal of the home you’re hoping to purchase

The jumbo loan requirements may seem daunting, but they’re not nearly as risky as they may seem. Not only are jumbo loan interest rates “not very different from the rates on conforming loans,” according to US News, but in many cases, they’re lower. And even if your application for a jumbo mortgage loan lacks in one area (i.e., having a lower credit score), you can still qualify by upping the amount of your down payment.

If you’re curious about whether this kind of loan is right for your situation, then let Poli Mortgage help! We offer a variety of plans that are designed to meet the needs of as many buyers as possible, and we’re committed to helping our customers find the most competitive mortgage rates. Reach out to us today to learn how we can help you get the house of your dreams!

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