How Much Can I Borrow With a Jumbo Loan?

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Purchasing a home is one of the biggest decisions one can make for themselves or their family. Choosing the ideal location is important, but when the prices start rising for more sought-after neighborhoods you may realize you need a larger loan than initially planned.

Don’t let this cause you any undue stress though as there are still options outside of the traditional conforming mortgage. Since conforming loans are regulated by Fannie Mae and Freddie Mac, they don’t always have enough wiggle room to get the amount of funds needed to secure a listing as they are sponsored and backed by the federal government which limits availability.

Jumbo loans are offered through private lenders meaning they can help with much higher priced home lending solutions. Whether you’re looking at luxury real estate or just a more expensive region, a jumbo loan could be exactly what you’re looking for.

Traditional Mortgages Don’t Always Cut It

When you choose to explore the option of jumbo loans, you’re breaking free of the funding limits that conforming loans have to adhere to. The Federal Housing Finance Agency, or FHFA, is the governing body that sets and adjusts the loan limits for conforming loans. While it does adjust for the cost of living in an area, it’s focused mainly on standard single-family homes.

Along with higher loan limits, jumbo loans also have no need for private mortgage insurance or PMI. That being said, since jumbo loans mean more risk for lenders they often have higher standards when it comes to approval so qualification can be more difficult.

Higher Loan Amounts Mean Stricter Requirements

Getting approved for a loan has the same basic approval categories whether it’s a traditional or jumbo loan. From there, each type of loan will start having more specific requirements or waivers if certain ones aren’t needed for that kind of lending solution. You’ll need to have a strong credit score and debt-to-income ratio which is the comparison of your monthly expenses compared to monthly income.

If you have too much money going out each month to afford a jumbo loan payment as well, then you may need to work on reducing your expenses to avoid missing out on a loan approval. Be prepared to provide your credit score and a financial statement for the underwriter to review when making the decision on approval and rates.

A financial statement will include proof of regularly recurring income streams as well as any other liquid assets such as cash accounts or company shares and stocks. Higher closing costs and down payments can also be expected when obtaining a jumbo loan.

Jumbo Mortgages Solve High-Value Home Lending Problems

The ability to place a bid on your dream home, no matter the size, depends on the readiness of funds you have available. When putting down a large or entire portion of the cost in cash isn’t an option, jumbo loans through the Potempa Team can be! Don’t hesitate to meet with one of our expert home lending professionals to see just what you could qualify for.

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