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NEWS & NOTES

Jumbo Loan Info

12/4/2020

 
A jumbo loan is one that exceeds the limits for conforming loans set by the Federal Housing Finance Agency (FHFA). These conforming loans are those that can be serviced by Fannie Mae and Freddie Mac. Because a jumbo loan exceeds these limits, it's also called a non-conforming loan.

To get one of these large mortgages, you'll probably have to jump through more hoops. For instance, you'll need to show you have a jumbo-sized salary and that you've saved a larger down payment, as a percentage of the total amount financed, than is required for a regular or conforming loan. Depending on other factors, it's not uncommon for lenders to require a 20 percent down payment for a jumbo, compared with as little as 5 percent--or sometimes less--for a conforming loan.

Conforming loans are generally sold to Fannie Mae and Freddie Mac, which means that they must adhere to the limits and requirements set by these government-sponsored enterprises. Jumbo loans, on the other hand, are not, and can be obtained through private lenders.
Jumbo loans may be a good option for you if you need a larger loan than the local limit for conforming loans and don’t have the cash flow to put down a larger down payment.

An added benefit of this mortgage option is that there’s no mortgage insurance requirement. However, because this loan may come at a higher risk to the lender, it typically has slightly stricter qualification requirements than typical conforming loans that possess lower limits.

The 2021 loan limit on conforming loans is $548,250 in most areas and $822,375 in high-cost areas. For borrowers interested in purchasing more expensive properties, jumbo loans are a valuable alternative.
Jumbo Loan On A Home PurchaseIf you’re buying a one-unit primary property with a loan amount of up to $1 million, you’ll need to have a minimum median FICO® Score of 700 and a minimum down payment of 20%.

The maximum debt-to-income ratio – which compares your minimum monthly installment and revolving debt payments to monthly income – must be no higher than 43%.

If the primary residence has more than one unit or the loan amount is higher than $1 million, you’ll have slightly different credit score requirements, and you’ll need to make a higher down payment – up to 40%, depending on the loan amount and type of occupancy.
Rate Or Term Refinance On A Jumbo Loan If you plan on doing a rate or term refinance on a jumbo loan, you’ll need to have a minimum FICO® Score of 700 and a maximum DTI of 43%.

The amount of equity you’re required to have in the home to refinance will depend on the loan amount. For a loan amount of up to $1 million, you must have at least 20% equity in your home. For loan amounts up to $2 million, you’ll need to have more equity in the home (up to 40%).

Jumbo Loan Rates
​
Because there’s greater risk involved in lending large amounts of money, jumbo loans typically carry higher interest rates than conforming loans. However, jumbo loan rates can vary dramatically, depending on your lender, finances and down payment.
When mortgages are viewed as involving less risk, lenders may choose to offer rates that are in-line or even lower than conforming loan rates.

This info is from a longer article  at:  https://www.quickenloans.com/learn/jumbo-loan
​

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cindy@lowermerionhomes.com
215.370.4830
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4 E. Montgomery Ave,  Ardmore, PA  19003
610.822.3356 (office)  
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site search:

  • Home
  • Contact
  • Testimonials
    • Read Reviews
    • Leave a Review
  • Listings
    • 504 Brookhurst
    • 40 Derwen Rd
    • 637 S. Bowman
    • 233 Marlboro Rd
    • 932 Clover Hill
    • 2729 Oakford Rd
    • Previous Listings >
      • 222 E Montgomery
      • 320 Winding Way
      • 208 Jefferson Rd
      • 401 Baird
      • 123 Glenwood
      • 127 Chestnut
      • 53 Schiller Ave
      • 101 Conway Ave
      • 314 Grayling Ave
      • 29 Hansen Court
      • 311 Gypsy Ln
      • 8 Brynwood Manor
      • 507 Baird Rd
      • 223 Valley Rd
      • 17 Shirley Road, Narberth
      • 3 Narwyn Ln, Narberth
      • 405 Merwyn Rd
      • 208 Woodbine Ave, Narberth
      • 225 Marlboro Rd, Ardmore
      • 112 Elmwood Ave
      • 262 Barwynne Rd
      • 526 Dudley Ave
      • 120 Merbrook lane
      • 219 Conway Ave
      • 19 Woodside
      • 105 Price Ave
      • 225 Iona
      • 381 E. Montgomery
      • 503 Valley View
      • 509 Monroe
      • 123 Elmwood
      • 157 Merion
      • 9 Chestnut
      • 311 Gypsy Lane
      • 225 Price
  • More
    • Start a Search
    • Our Team
    • Compass Concierge
    • News and Notes
    • LMSD Schools >
      • Elementary Schools
      • Middle Schools
      • High Schools
    • Narberth >
      • About Narberth and Narberth Real Estate
      • Narberth Calendar
    • Lower Merion & Narberth Trash & Recycling