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    Jumbo Loan Overview

    Conventional home loans have a limit of $484,350. So if you’re shopping for an expensive house or in a pricey neighborhood or market, you’ll need a different option when it comes to financing. A jumbo loan may be a good fit! Jumbo loans are designed for higher-priced homes and luxurious properties. However, there are more differences between jumbo loans and traditional, government-backed mortgages than merely the loan size. Here is everything you need to know about jumbo loans.

    What is a Jumbo Loan?

    A jumbo mortgage, or loan, is a loan that exceeds the conforming lending limits regulated by the Federal Housing Finance Agency (FHFA). This limit restrains the loan balance on mortgages that are backed by a government-sponsored program like Fannie Mae, Freddie Mac, and Ginnie Mae. 

    Is a Down Payment Required for a Jumbo Loan?

    Down payments play a significant role in the jumbo loan application process. While conventional loans may not even require a down payment, the traditional 20%, or more, may be a prerequisite for many jumbo lenders. 

     

    Is it More Difficult to Qualify for a Jumbo Mortgage?

    Due to the increased loan size of these mortgages, the qualification process is more stringent. Every consideration from income, debt, credit score, down payment, is evaluated and there is typically more stringent financial requirements. While conforming loans have their underwriting requirements set by Fannie Mae and Freddie Mac, jumbo loans carry a higher risk for the lender, and the underwriting requirements are determined by each investor. 

    What Type of Credit Score is Required for a Jumbo Loan?

    While different government-backed mortgage programs have lower credit score minimums, jumbo loans typically have higher requirements. Due to the increased risks for lenders, a high credit score and strong credit history will be required to be approved for a jumbo mortgage.

    What is an Acceptable Debt-to-Income Ratio for a Jumbo Loan?

    While debt-to-income ratio is a standard consideration for any type of lending, it is an especially scrutinized factor for a jumbo loan. Due to the high cost of these types of loans, your lender will typically require a lower debt-to-income ratio.

    Are There Any Unique Requirements for a Jumbo Loan?

    Based on the price of the home and other underwriting considerations, some lenders may require you to have cash reserves on hand. It is not uncommon for lenders to require between three and 24 months of cash. There are several ways to satisfy this prerequisite for liquid assets, like retirement accounts. This condition can also be mitigated with a very low DTI or a sizeable down payment.

     

    Are Interest Rates Higher or Lower for Jumbo Loans?

    It used to be common for jumbo loan interest rates to be higher than the rates for conventional loans. This is because not only does the higher dollar amount create more risk for the lender, but more expensive homes can be susceptible to larger fluctuations in value. However, today, while still somewhat higher, the interest rates for jumbo loans are relatively similar to those for other mortgage products. 

    Is the Interest Paid on a Jumbo Loan Tax Deductible?

    While deducting the interest paid on a conventional mortgage from your taxes has long been an option for homeowners. Recent changes in tax law now allow holders of jumbo mortgages to deduct the interest paid on the first $750,000 of your primary or second home. However, you should always consult a tax professional about your situation.

    What Types of Property Can be Purchased with a Jumbo Loan?

    Jumbo loans can be used to purchase a variety of types of homes. Whether it’s your primary residence, a second home, or an investment property; depending on the price, value, and your personal financial status, a jumbo loan can be a viable option for your next home purchase.

    Where Can I Apply for a Jumbo Loan?

    Standard Mortgages has loan officers in New Orleans, Metairie, Baton Rouge, Slidell, Mandeville, Lafayette, Lake Charles, and Shreveport. We also serve Alabama, Arkansas, Colorado, Florida, Georgia, Kansas, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee, and Texas

     

    Mortgage rate options

    Every homebuyer has unique needs. Standard Mortgage strives to meet them with quality service and individual attention. We pride ourselves in giving you the mortgage information, loan options, and convenient assistance you’re looking for, including what to expect when you apply for a mortgage loan. With a variety of loan programs and an established network of lenders behind us, we help you find the loan that best suits your needs and at a competitive rate.

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    Adjustable Rate Mortgages (ARM)

    An adjustable rate mortgage (ARM) is based on a predetermined index and margin, which can go up or down at specified intervals based on the index.

    Conventional Loans

    A conventional loan must meet nationally standardized guidelines, such as income, credit, and property requirements. Loans are subject to amount limits set by Fannie Mae and Freddie Mac.

    Federal Housing Administration (FHA)

    The Federal Housing Administration — commonly referred to as HUD — issues loans that provide affordable mortgages to the average homebuyer.

    Fixed Rate Mortgages

    A fixed-rate mortgage is the most common type of mortgage program. Your monthly payments for interest and principal never change.

    JUMBO

    A jumbo loan, or non-conforming mortgage, is for homebuyers who expect to borrow more than $424,100 for single-family residences.

    USDA Rural Development

    A USDA Rural Development loan helps rural home buyers purchase a home with no down payment, low fixed rates, simple credit requirements, and the guarantee of the federal government.

    Veterans Administration (VA)

    Veterans Administration loans help veterans — including active duty service personnel and certain categories of spouses — finance the purchase of their homes with favorable loan terms.

    Buying a home can seem like the most complicated financial process in the world, especially if you've never done it before.  

    Standard Mortgage is here to help you navigate the daunting, complicated process that lies ahead. In this eBook, we’ll walk you through the eight steps you’ll have to take before you hold the keys to your new home.

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    Home Mortgage Buyer's Guide