What is a Jumbo Loan?
The maximum loan amount approved by Fannie Mae or Freddie Mac is typically $424,100 for a single-family residence, but can reach as high as $636,150 in higher-cost areas. Anyone in need of a larger loan will need to look toward non-conforming options such as the Jumbo loan. A jumbo loan is a mortgage with a loan amount that exceeds these limits. At CalStar Mortgage, we offer jumbo loans on a variety of property types including primary residences, vacation homes, and investment properties.
At CalStar Mortgage we offer jumbo loans on a variety of property types including primary residences, vacation homes, and investment properties throughout La Canada Flintridge, Beverly Hills, West Hollywood, Encino, Sherman Oaks, and all of California.
Since they are considered non-conforming and ineligible for purchase by Freddie Mae or Fannie Mac, Jumbo loans are generally a bit riskier for lenders compared to conforming loans. Lending criteria and credit requirements can be more stringent with a jumbo loan. Slightly higher interest rates can be charged as well. Some of the more common requirements that must be met for a borrower to qualify for a jumbo loan can be found below. One thing to note is that lenders can always set their own jumbo loan criteria as the loans do not need to adhere to the same Fannie Mae and Freddie Mac guidelines that conforming loans do.
Features of a Jumbo Loan
A credit score around 700 is going to be required for a jumbo loan. Lender-specific criteria set as well as the borrower’s unique financial situation may offer flexibility.
Traditionally, a down payment of at least 20 percent is needed for a jumbo loan. Lower down payments closer to 10 percent may be available for some borrowers. Income and assets will need to support the lowered down payment requirement and private mortgage insurance (PMI) may be required.
Debt-to-Income Ratio and Income
A debt-to-income ratio of 43 percent or less is standard. Documentation such as W2 forms and recent paystubs will be required to verify income. This is necessary to prove that you have the income and reserves necessary to cover your mortgage payments.
The property being purchased will need to support the purchase price and the mortgage being applied for.
Documentation outlining proof of income, liquid assets, non-liquid assets, and any other loans that you may hold will be required so be prepared to provide this information. Your lender requires this information to show that you have the ability to repay the loan you are applying for. Missing documentation can delay the approval process so the more information you can gather ahead of time, the smoother the process will be.
Benefits of a Jumbo Loan
There many benefits to jumbo loans, including not having multiple mortgages.
Get Pre-Qualified for a Jumbo Loan Today
Jumbo loans can be a great choice for many different types of borrowers including those looking to purchase a more expensive home, investment property, or even a second home. CalStar Mortgage offers great rates and flexible payment options on jumbo loans. Contact us today at (818) 952-2815 for more information on jumbo loans or to begin the pre-qualification process. CalStar Mortgage, Inc is located in La Canada Flintridge, and serves surrounding areas including Beverly Hills, West Hollywood, Encino, Sherman Oaks, and all of California.