For the borrower with excellent credit and a budget of more than $647,200.
Loan amounts that exceed the county conforming loan limits are considered jumbo loans. Both conventional and VA loans offer these jumbo products to purchase or refinance luxury or higher-priced homes.
Jumbo Loan Facts
Jumbo loans can help a borrower obtain a larger than average loan amount.
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Frequently Asked Questions
1. Are jumbo loan guidelines strict?
Jumbo loans are more strict than traditional loans under conforming loan limits. Although, today’s jumbo loans are not nearly as strict as they were a few years ago. Conventional, jumbo loans do offer as little as 10% down on a primary residence purchase, and VA jumbo down payment percentages may be even lower depending on the price and borrower entitlement available. It is suggested that jumbo borrowers have higher credit scores and lower debt to income ratios.
2. Is there an alternative to jumbo loans?
If a loan amount exceeds the conforming loan limit by a small amount, it could be beneficial to split the loan into two loans. Especially in the case of less than 20% down! Borrowing a conforming loan size on the first mortgage combined with a home equity line of credit could provide advantages in rate, payment, and avoiding mortgage insurance.
3. How much cash reserves should the borrower have?
Prepare to show that you have financial reserves. A lender will want to see that you have 2 to 3 months of cash reserves to cover principle mortgage payments, interest, taxes, and insurance.
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