Jumbo Mortgages

In most housing markets, a jumbo loan can purchase a home worth more than the conforming loan limit set by Fannie Mae and Freddie Mac for a single-family home.

What is a jumbo mortgage loan?

Jumbo loans are designed to help borrowers finance high-priced homes that exceed the conforming loan limits set by Fannie Mae and Freddie Mac.

How does a jumbo mortgage loan work?

A jumbo mortgage works similarly to a conventional home loan but is specifically designed for properties exceeding the conforming loan limits set by Fannie Mae and Freddie Mac. However, because jumbo loans are larger and carry more risk for lenders, they come with stricter qualification requirements. Borrowers typically need a higher credit score, a lower debt-to-income (DTI) ratio, and significant cash reserves to qualify. Additionally, jumbo loans may require a larger down payment compared to conventional mortgages.

While jumbo loans often have slightly higher interest rates, competitive lenders like Direct Mortgage Loans work with multiple investors to provide strong pricing options. This ensures that qualified borrowers could secure favorable terms, even for high-value properties.

Jumbo Mortgage Loan Benefits  

Jumbo loans offer a range of benefits, especially for borrowers looking to purchase high-value homes. Key advantages include: 

  • Financing High-Priced Properties: Jumbo loans allow buyers to finance homes that exceed conforming loan limits without needing multiple loans or large upfront cash payments. 
  • Flexible Loan Options: Jumbo loans could be customized with various loan terms, including fixed-rate and adjustable-rate mortgage (ARM) options. 
  • Luxury and Investment Properties: These loans could be used for second homes, vacation homes, or investment properties, making them ideal for diverse financing needs. 
  • Competitive Rates: While jumbo loan rates could be slightly higher, lenders like Direct Mortgage Loans offer competitive options for well-qualified borrowers with strong credit and financial profiles. 

Rates are subject to change. Eligibility and approval are subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Direct Mortgage Loans, LLC is licensed in Maryland. Direct Mortgage Loans, LLC NMLS ID# is 832799 (www.nmlsconsumeraccess.org). Direct Mortgage Loans, LLC office is located at 11011 McCormick Rd Suite 400 Hunt Valley, MD 21031. This is a paid endorsement. Equal housing lender.

Why would someone want a jumbo mortgage loan? 

Here are some situations when you might consider getting a jumbo loan:

  • You’re buying a high-priced home: Jumbo loans are designed for borrowers who need to borrow more than the conforming loan limit, which is $806,500 for most parts of the United States in 2024. If you’re buying a home that exceeds this limit, a jumbo loan may be your only option.

  • You have a higher income: Jumbo loans typically have higher credit and income requirements than conforming loans. If you have a high income and good credit, you may be eligible for a jumbo loan.
  • You have a larger down payment: Jumbo loans typically require a larger down payment than conforming loans. If you have a larger down payment saved up, a jumbo loan may be a good option.
  • You want more flexible lending standards: Jumbo loans often have more flexible lending standards than conforming loans. If you have unique financial circumstances, such as self-employment income or a high net worth, a jumbo loan may be a good option.
  • You want to consolidate debt: Jumbo loans can be used to consolidate debt, such as high-interest credit card debt or student loans. If you have a lot of debt and need to refinance your home, a jumbo loan may be a good option.

It’s important to note that jumbo loans typically have higher interest rates and stricter lending requirements than conforming loans. Be sure to weigh the pros and cons carefully and consult with a mortgage professional to determine whether a jumbo loan is right for you.

Jumbo Mortgage Limits

In most housing markets, a jumbo loan can purchase a home worth more than the conforming loan limit set by Fannie Mae and Freddie Mac for a single-family home.

The Federal Housing Finance Agency sets the limit for loans, the amount of which changes approximately every three years. In high-cost counties, the counties set the loan limit.

Direct Mortgage Loans’ jumbo products vary in terms and are available for a variety of property purchases. The jumbo loan limit is substantially higher than the conforming loan limit, making a jumbo loan mortgage an attractive option for people who are either buying large homes, second or third homes, or who live in areas with particularly high home prices.

The following is true of Direct Mortgage Loans jumbo home loans:

  • Jumbo loan amounts up to $5 million.
  • Can be used for second homes and investment properties.
  • Single loan up to 90% financing.

Qualifying for a Jumbo Mortgage Loan

Because jumbo loans are for greater amounts than standard loans, the qualifications for a jumbo loan are going to be a little narrower. But generally, the following is true:

Jumbo Mortgage Credit Score

To qualify for a large jumbo loan amount, your FICO credit score will need to be higher than 700.

Jumbo Mortgage Debt-to-Income Ratio

The best jumbo loan lenders will take into account your debt-to-income ratio. This will be more strict than a conventional loan because the jumbo mortgage lender doesn’t want you to become over-leveraged. This number can be flexible, but it can reach a 45% debt-to-income ratio.

Jumbo Mortgage Cash Reserves

Having cash reserves in the bank is a requirement for a jumbo loan. Loan-to-value (LTV), credit score, and debt-to-income will also play a part in the specific amount of cash reserves required for a jumbo loan.

Jumbo Mortgage Down Payment

With conventional loans, smaller down payments can be considered, but with a jumbo loan, at least 20% is considered the starting point.

Jumbo Mortgage Interest Rates

Generally, jumbo loans have higher interest rates than your conforming rates. This is not always the case and every loan is evaluated on a loan-by-loan basis. Direct Mortgage Loans has multiple jumbo loan investors that offer strong pricing in certain scenarios, and you may qualify for a lower rate than traditional loans if the applicant has a very high credit score, a good debt-to-income ratio, and a good down payment.

Piggyback Jumbo Mortgage Loans

A piggyback mortgage or piggyback loan is one in which a second mortgage is given at the same time as the mortgage. The purpose of a piggyback loan is to allow borrowers with low down payments to get the extra money that they need to get the mortgage without needing mortgage insurance. Additionally, it allows home buyers to finance more money above the conforming loan limit while keeping a low down payment.

What is a Jumbo loan?

FAQ’s About Jumbo Mortgage Loans

Do you have to put 20% down on a jumbo mortgage loan?

While a 20% down payment is the standard starting point for jumbo loans, it’s not always required. Some lenders may allow down payments as low as 10% for highly qualified borrowers with strong credit and financial standing. However, a higher down payment could improve loan terms, lower interest rates, and help borrowers avoid private mortgage insurance (PMI).

Are jumbo mortgage rates higher than conforming loan rates?

Jumbo mortgage rates are generally slightly higher than conforming loan rates because they carry greater risk for lenders. However, borrowers with excellent credit scores, a low debt-to-income ratio, and substantial cash reserves can often secure competitive rates. At Direct Mortgage Loans, we work with multiple investors to offer tailored solutions and competitive pricing for jumbo loans.

What are the current jumbo mortgage rates?

Jumbo mortgage rates could vary based on market conditions, loan amount, credit score, and the borrower’s financial profile. Generally, jumbo loan rates may be 0.25% to 0.5% higher than conforming rates, but this could vary. To get the most accurate and up-to-date jumbo mortgage rates, it’s best to speak directly with a loan officer at Direct Mortgage Loans.*

Is it difficult to get a jumbo mortgage loan?

Qualifying for a jumbo mortgage could be more challenging than a conforming loan due to the stricter requirements. Lenders typically look for:

  • A credit score of at least 700
  • A debt-to-income ratio of 45% or lower
  • Significant cash reserves to cover loan payments
  • A larger down payment (usually 20% or more)

While the process may seem complex, working with an experienced lender like Direct Mortgage Loans can simplify the process. Our team helps borrowers navigate requirements and find customized solutions to meet their jumbo financing needs.

*Rates are subject to change. Eligibility and approval are subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Direct Mortgage Loans, LLC is licensed in Maryland. Direct Mortgage Loans, LLC NMLS ID# is 832799 (www.nmlsconsumeraccess.org). Direct Mortgage Loans, LLC office is located at 11011 McCormick Rd Suite 400 Hunt Valley, MD 21031. This is a paid endorsement. Equal housing lender.

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