Qualifications for jumbo mortgage

Keep in mind that sometimes the mortgage terms can be affected if you pay a smaller down payment. Ensure that you read your mortgage documentation carefully before deciding on the ideal amount of down payment.

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Jumbo mortgage rates are close to matching other loan rates in most markets. This makes bigger, high-end homes affordable and lets buyers stay within their budgets. Initially, buyers had to tap into their savings to have the large down payments needed to lower jumbo pricing. Fortunately, jumbo rates are now similar to conforming rates, making jumbo mortgages more cost-effective.

What is a jumbo mortgage?

Jumbo mortgages are loans that are considered to be gigantic. They surpass the conforming limit that Fannie Mae and Freddie Mac can buy. If you'd like to purchase a more expensive home, you will probably require hard money jumbo loans.

The conforming limit will vary depending on the property's location. Some housing markets consider a mortgage worth $ 417,000 and more jumbo. But, in the most expensive housing markets, the home loan must be as high as $700,000 or more to be considered a jumbo mortgage.

Are you planning on buying a large house soon? Would you like to contemplate using a Jumbo mortgage? Below are jumbo mortgage essential factors and how you can qualify for a loan:

Credit Score

An excellent credit score is an essential criterion to qualify buyers for a jumbo mortgage loan. Because you now need a larger loan compared to other types of mortgages, your lender will be harsher when checking your credit scores. Lenders don't want to deal with a questionable borrower. Additionally, different lenders will have different minimum credit score limits that they work with. However, there is a general rule. You'll need a minimum credit rating 640 to qualify for a jumbo mortgage.

To determine the credit score, your lender will consider three credit reports from crucial credit bureaus. Often, they will look at your middle score and use it as the credit rating. This means they will not use the best or worst score to determine the credit score.

Income

This is another essential part of meeting the requirements of a jumbo mortgage. You must show sufficient liquid reserves and income to cover the payments to qualify. Like the credit score, the income requirements will vary from one lender to another. Your lender must look at your debt-income ratio and determine if you are a potential good borrower. You must be able to pay the principal, taxes, interest, and insurance comfortably to qualify.

Traditional borrowers require recent paystubs that date back thirty days and W2 tax forms that show your income for the past two years. Self-employed borrowers find the process more challenging compared to salaried borrowers. You'll need to provide two-year tax returns and bank statements of at least 60 days. You may also require liquid assets to qualify.

Down Payment

Although the application process might seem more challenging, you will have one thing to look forward to the down payments will not be set very high. In the past, one had to have a 20%-30% down payment to get a jumbo loan, but today you only need 10% as long as you have good credit. In most cases, expect to have at least 5% of the property value as a down payment, but the rate will vary depending on your lender.

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