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Jumbo Loan

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 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:

Credit Score

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

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. 

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. 

Down Payment

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

Higher 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 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.

Connect With A Loan Officer To Learn More

Connect With A Jumbo Loan Officer To Learn More