Jumbo Loans exceed the maximum loan amounts established by Fannie Mae and Freddie Mac conventional loan limits. Rates on jumbo loans are typically higher than conforming loans. They are typically used to buy more expensive homes and high-end custom construction homes. Typically Jumbo Loans require a higher down payment than traditional loans.
Not everyone meets the criteria for a Jumbo Loan. Credit score requirements may need to be higher than 700 at least. Generally, most lenders require a 20% down payment. If you decide to buy a second home or even multi-unit properties, the downpayments may be hire.
Additionally, there are VA Jumbo loans where a down payment may not be required. However, this may require a higher credit score 740 or up. Below that you may need a 10% down payment at least.
Individuals who tend to have large amounts of cash in the bank are more likley to be considered for a Jumbo Loan. However, if considered, extensive financial documentation will be expected to ensure your are financially capable to pay consistently.
Some other factors to consider in a Jumbo Loans are:
- Higher Closing Costs
- Need Consistent Income
- Rigorous Underwriting and longer timeframe from application to close.
- Higher VA funding fee if you are doing a VA Jumbo Loan