What Is A Jumbo Loan?
A jumbo loan is a type of home loan that allows borrowers to qualify for a larger loan that exceeds the conforming loan limits, which typically cut off at $625,000 for most counties. Put simply, a jumbo loan, also known as a jumbo mortgage, will offer high-end financing that traditional loans cannot.
Typically, a jumbo loan is recommended for those who are looking into purchasing homes in a highly competitive real estate market (with correspondingly higher prices). Because these properties usually far exceed average listing prices, it’s less likely that even the most financially stable borrowers will have the necessary amount of cash on hand for a traditional loan. Jumbo loans make it possible to purchase these properties by financing a greater value.
Here are some general rates and terms you can expect for jumbo mortgage loans:
Interest rates: Jumbo mortgage loans typically have higher interest rates than conforming loans. The exact rate will depend on several factors, including the borrower's credit score, down payment, and debt-to-income ratio. As of February 2023, the average interest rate for a 30-year fixed jumbo mortgage is around 3.5% - 4.5%, but rates can vary widely depending on market conditions and lender policies.
Loan amounts: Jumbo mortgage loans are typically available for loan amounts above $548,250 (as of 2021), but the specific threshold can vary by location. Some lenders may offer jumbo loans for amounts up to $10 million or more.
Down payment: Because jumbo loans are considered riskier, lenders often require a higher down payment compared to conforming loans. A typical minimum down payment is around 10-20%, but some lenders may require more.
Credit score: Lenders may require a higher credit score for jumbo loans compared to conforming loans. A credit score of 700 or higher is generally considered a minimum for jumbo loans.
Debt-to-income ratio: Lenders may also have stricter debt-to-income (DTI) ratio requirements for jumbo loans. A DTI ratio of 43% or lower is generally required, but some lenders may allow higher ratios if the borrower has significant assets or other compensating factors.
It's important to note that rates and terms for jumbo mortgage loans can vary widely depending on the lender, the borrower's financial situation, and market conditions. It's always a good idea to shop around and compare multiple lenders to find the best jumbo loan for your needs.
To find out more about our Jumbo Loan program at NW Alternative Mortgage give us a call at 503-343-7999 today!