Jumbo Loan | Exciting low rates!
The size of a jumbo loan varies by location but is generally more than $726,200. Jumbo loans can have stricter underwriting guidelines, such as higher credit scores, income/assets and down payment requirements but currently are priced better than conforming loans and may require less money down. Jumbo loans are used for primary homes, 2nd homes and investment properties and are available in a variety of terms, including fixed-rate and adjustable-rate loans.
A Jumbo loan has a few more credit requirements than a conventional loan. Jumbo investors must comply with qualified mortgage guidelines set by the Consumer Financial Protection Bureau (CFPB). The Conforming loan limit is up $79,000 since 2022, making the limit for one-unit properties $726,200 for 2023. In Alaska, Guam, Hawaii, Puerto Rico, and the U.S. Virgin Islands, the limit rose 150%, or a maximum of $1,089,300.
With a bigger loan amount come bigger monthly payments and additional scrutiny to ensure you can cover the mortgage. Expect to provide at least two years of W-2s, business and personal tax returns, plus recent bank and investment statements, proof of cash reserves or liquid assets to pay for up to a year’s worth of mortgage payments, any non-liquid asset ownership, like other real estate properties.
Pros and Cons. More house with less loans when looking at high-value properties. Competitive interest rates, sometimes lower than conforming rates. Lenders may choose to keep these portfolio loans instead of selling them on the secondary market. Flexible loan options without restrictions from Fannie Mae & Freddie Mac.
A downside can be the Cash reserve requirement: Some investors may require up to 12-months of mortgage payments set aside in an account to ensure you can pay the mortgage. Ask Par 4 Mortgage for details. Some Jumbos require Excellent credit and could have Tax implications. A Jumbo loan does not have a federal loan limit. Jumbo loan limits vary by lender but can be multi-millions for a single-unit property in Vail, Colorado or South Beach, Florida.
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