If you’re ready to super-size your mortgage, then understanding lending guidelines for jumbo mortgage loans is crucial. Whether you’re applying for a conventional or jumbo loan, most approval requirements are the same (i.e., debt-to-income ratios, type of paperwork required, minimum credit scores).
So what’s the difference between conventional and jumbo lending? Aside from the loan amount exceeding conforming limits, with jumbo financing comes greater risk for the lender – larger loan amounts equate to greater risk.
Let’s take a look at some commonly asked jumbo questions you might have:
What kind of jumbo programs are available?
Jumbo programs allow for fixed, adjustable and interest only programs. You will typically find adjustable programs offer the most attractive rates.
Is there a minimum credit score for jumbo financing?
Most jumbo lenders require you have no less than a 700 credit score; however, there are some lenders that allow scores far below 700.
Speak with your mortgage professional about qualifying with lower credit scores.
Are there restrictions on how I receive my income?
No. Acceptable forms of income include: self-employed, W2 employee, retirement or asset based income.
With the exception of most asset based lending, it’s important to know income can only be used if you have paid taxes on said income. This means anything you have written-off on your federal tax returns is not considered income and will be deducted from your qualifying annual income. Watch those deductions!
How much will I need in savings?
You will need enough to cover your down payment, closing costs and a minimum of six months reserves.
Reserve formula: one month reserve = one mortgage payment (this includes taxes, insurance and any assessments)
Will I need more than one appraisal?
Loan amounts that exceed one million will typically require two appraisal inspections.
Are there property type limitations?
You can purchase up to a 4 unit multi-family home; however, anything over four units is considered commercial and in a different financing ballpark altogether.
Contact your seasoned mortgage professional for more information about jumbo financing guidelines.
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