4 Common Myths Associated With Jumbo Loans L1:B2

Hard money jumbo loans are now easily accessible and a viable option to many first-time homebuyers in some parts of the country. Jumbo loans are a type of mortgage that exceeds the set limit for government-insured loans.

last updated Sunday, July 13, 2025
#JUMBO LOANS #Jumbo loans

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by John Burson

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Hard money jumbo loans are now easily accessible and viable for many first-time homebuyers in some countries. Jumbo loans are mortgages that exceed the set limit for government-insured loans. The set limit in most parts of the country is $417,000 or $625,000 in areas with a higher cost of living.

Hard money jumbo loans are known to be challenging to obtain and expensive. This causes several eligible buyers to dismiss them and opt for conventional loans because they are believed to have lower interest rates compared to jumbos and other nonconforming loans. However, although hard money jumbo loans were previously expensive and had several barriers, they are now more accessible and offer affordable rates.

4 Common Jumbo Loan Myths

Myth No. 1: They are Only Used to Purchase Mansions

In some of the expensive cities in the country, you may be hard-pressed to find a house that requires a mortgage that fits the conforming limits. For instance, in areas where the median home price is $1 million, most homebuyers would qualify for these hard money jumbo loans. Some parts of the country with hot housing markets have also pushed middle-class properties into hard money jumbo loans.

Myth No. 2: You Are Required to Pay a Hefty Down Payment to Qualify

Some time back, people had to pay up to 30% down to qualify for hard money jumbo loans. That isn’t the case today. Competitive lenders are now seeking qualified buyers and offering hard money jumbo loans with a 10% down payment. Unlike conforming loans, when you put a down payment that is less than 20% of your hard money jumbo mortgage loan, you won’t increase the cost of the mortgage insurance.

To qualify for a hard money jumbo loan with a low down payment, you need to have a good credit record, and you may also face strict requirements on your cash reserves and debt-to-income ratio. However, the jumbo lending requirements have been loosening up for the last couple of years. Like any other mortgage, you should conduct deep research as you shop around to ensure you get only the best rate.

Myth No. 3: Conforming Loans Have Better Rates

When the real estate industry was booming, the rate of hard money jumbo loans was a half-point higher than that of conforming loans. However, these rates have fluctuated over the years, and some banks are now offering these loans at rates as low as 3.8%, which is lower than the rate for conforming loans at 3.85%.

Myth No. 4: Jumbos Have Fewer Options

After the mortgage crisis, only well-established banks could give hard money jumbo loans. However, as the market has improved, more small hard money jumbo loan lenders and online non-bank financiers have emerged to offer a broader range of jumbo loans. The pricing has become competitive due to a high level of jumbo activity, with several lenders vying for a share of the market.

 
 
 

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