What is a Jumbo Mortgage?
A jumbo loan (or jumbo mortgage) is a type of financing in which the loan amount exceeds Fannie Mae’s loan limits. A jumbo loan provides financing options for borrowers purchasing higher value properties.
What is the Difference Between a Jumbo and Conforming Mortgage?
The critical difference between a jumbo and conforming loan is the loan size. Since jumbo loans are larger than conforming loans, they are inherently riskier to mortgage companies and may require the borrower to meet stricter guidelines. Additionally, unlike conforming loans, jumbo loans typically do not require the borrower to have private mortgage insurance, no matter the down payment size. Use our mortgage amortization calculator to help you visualize which monthly mortgage payments may fit within your desired budget.
Jumbo Mortgage Requirements – How to Qualify for a Jumbo Mortgage
Typically, a borrower must meet the following criteria to be eligible for a jumbo loan:
Lower Debt-to-Income Ratio
Since jumbo loans have more associated risk, the lender may require the borrower to have a lower debt-to-income ratio. Monthly mortgage payments may be larger than that of a conforming loan, so having less monthly debt obligations can help a lender determine your ability to repay the loan.
Higher Down Payment
It is common for the down payment requirement to be higher than that of a conforming loan to mitigate the lender’s risk. If you have more invested in the property, you may be less likely to default on the loan.
Higher Credit Score
Lenders may prefer that you have a higher credit score. A higher credit score may show a history of a strong ability to repay monthly debts on time and in full.
Higher Reserves & Assets
It is common for lenders to require higher than usual reserves and assets for borrowers applying for a jumbo loan. The lender will review your reserves and assets to understand the strength of your financial profile overall.
Second Appraisal
A jumbo loan may require a second appraisal on the subject property to evaluate the home’s actual value and make sure it aligns with the anticipated loan-to-value.
What are the Loan Programs for Jumbo Mortgages?
A jumbo loan covers residential purchases and refinances for single-family homes, co-ops, and condos. GuardHill offers jumbo loans with a 30-year fixed-rate or adjustable-rate (ARM) program.
How to Refinance your Jumbo Mortgage
Jumbo loan refinancing requirements may vary depending on your financing goals. If you are looking to take advantage of a lower interest rate and lower your monthly payment, you may be required to have a minimum of 20% equity in your home. GuardHill also offers jumbo loan cash-out refinancing. However, the limits on how much cash you can take out may also vary depending on the equity you have in your home.
Why Choose GuardHill?
GuardHill has over 31 years of mortgage financing experience and specializes in providing standard and out-of-the-box financing solutions for our customers. GuardHill works with numerous investors and lenders and offers various loan programs to provide borrowers with the best financing solutions possible.
