Jumbo Loans

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A Jumbo Loan at Mabrey

A Jumbo Loan, also known as a Jumbo Mortgage, is a loan that exceeds the maximum loan limits set by the Federal Housing Finance Agency. Like Conventional Loans, a Jumbo Loan can come in various terms and repayment schedules while being either a fixed-rate or adjustable-rate loan. There are some similarities to Conventional Loans, however Jumbo Loans have stricter requirements for a borrower, including the down payment, credit score and debt-to-income ratio. This type of loan can be used on numerous property types, including primary residences, vacation homes and investment properties.

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Is a Jumbo loan right for me?

If you are buying a high-priced home or piece of property and your loan amount exceeds the conforming loan limit set by the FHFA, a Jumbo Loan could be your best bet. You will need at least a 710 credit score, a 20% down payment and a solid financial history. For many that can afford mortgages from Jumbo Loans, this is a great option.

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Requirements

A 20% down payment is required for a Jumbo Loan. A 10% down payment could be possible based on the property type and loan amount, but it will come with high interest rate adjustments.

Private Mortgage Insurance (PMI) will be required for any down payment less than 20%, similar to a conforming loan.

A 710 credit score is required to secure a Jumbo Loan.

Mabrey will require a 41% cap on your Debt-to-Income Ratio (DTI) for a Jumbo Loan.

To qualify for a Jumbo Loan, a borrower will be looking for a loan that exceeds the FHFA’s conforming loan maximum of $726,200 in most areas of the country. In high-cost areas, the minimum for a Jumbo Loan could be as much as $1,089,300 for 2023. Loan limits are set by the FHFA on a county-by-county basis.

Lenders will often want to see the cash reserves that borrowers have on hand before approving a Jumbo Loan. To be approved, borrowers will likely need enough cash in the bank to cover between 6 to 24 months of mortgage payments.

Jumbo Loans are often manually underwritten, which means that a finance expert will go through a borrower’s financial history in depth. Any past financial transgressions could impact the ability to be approved for a loan.

Benefits of a Jumbo Loan

Ability to secure a large loan that exceeds the FHFA loan limit
The possibility for a competitive interest rate
Flexibility of a non-conforming loan with a customizable mortgage solution
Availability of a VA Jumbo Loan (more below)
The convenience of consolidating multiple home loans into a single loan

Jumbo Loan FAQs

What is considered a Jumbo Loan?

A Jumbo Loan is a non-conforming loan that exceeds the maximum limit of a conforming loan set by the Federal Housing Finance Agency (FHFA). The limit changes annually, and the 2023 maximum limit for most areas of the U.S. is $726,200. If a mortgage loan were to exceed that amount, a borrower could apply for a Jumbo Loan to be used on a primary residence, vacation home, or investment property.

Are Jumbo Loan rates higher than a Conventional Loan?

There are many variables at play involving interest rates. This depends on the terms of the loan, the down payment, a borrower’s credit score and other factors. However, because the terms for a Jumbo Loan are set by a lender and often customizable to the borrower’s specific situation, there is the ability for a borrower to secure a better interest rate for their loan if they meet all the necessary requirements.

Is a Jumbo Loan a Conventional Loan?

By definition, a Jumbo Loan cannot be a Conventional Loan. Both Jumbo and Conventional Loans require higher down payments and credit scores than government-backed loans. If the down payment is adequate, neither require mortgage insurance. However, a Jumbo Loan comes with more requirements for a borrower to meet.

Do Jumbo Loans have Private Mortgage Insurance (PMI)?

Only if there is less than a 20% down payment. If the buyer does not put at least 20% down on the cost of the home, Mabrey requires Private Mortgage Insurance.

Can a VA Loan be a Jumbo Loan?

Yes. A Veterans Administration Loan is the only type of government-backed loan that can exceed the loan limits set by the FHFA. If you are a current or former service member and meet the requirements, you could qualify for a Jumbo Loan. There are different requirements for this type of loan, including the possibility of zero down payment and a lower credit score. However, a VA Jumbo Loan can only be used for a primary residence, not a vacation home or investment property.