Jumbo mortgages: what they are and when you need one
Mortgages aren’t one-size-fits-all. Depending on how much financing you need or want for a home, your loan might be classified as a jumbo mortgage. This type of loan comes with unique requirements and benefits.
Jumbo mortgages defined
In the mortgage world, jumbo refers to loans for amounts that exceed the “conforming” loan limit set by the government-sponsored enterprises that purchase many mortgages. As of 2023, the conforming loan limit for 1-unit homes in most of the U.S. is $726,200. In certain parts of the country, the limit is as high as $1,089,300 (see this map for specifics). The regional limits for multi-unit homes are higher. Any mortgage that exceeds the limit for the area where a home is located is a jumbo loan, which is also known as a “nonconforming” loan.
How to qualify for a jumbo loan
Qualifying for a jumbo loan comes with stricter requirements than for conforming loans. These hurdles typically include higher minimums for income, credit scores and financial reserves. Jumbo borrowers are often expected to have assets that can cover six to 12 months of mortgage payments. Down payment minimums for jumbo loans typically start around 10%.
The benefits of a jumbo loan
While it may be harder to obtain, a jumbo loan also offers benefits. The primary benefit, of course, is the opportunity to obtain more financing, which allows for purchasing or refinancing more home – and using less cash compared to making a larger down payment to meet the conforming loan limit. Other advantages include the fact that some jumbo loans with less than 20% down don’t require mortgage insurance (as is typically required with a down payment of less than 20%), and adjustable-rate mortgage (ARM) options may be more widely available with jumbos.
Our jumbo loan options
At Draper and Kramer Mortgage Corp., providing jumbo financing is one of our specialties. We offer many jumbo loan products, and we underwrite them in house for faster processing. Our jumbo loan options include the following:
- Down payments as low as 10%
- Loan amounts up to $3 million or higher
- Available for primary, second and investment homes and condos (warrantable and non-warrantable), co-ops and 1- to 4-unit homes
- Fixed- and adjustable-rate loans
- Home purchases and cash-out or rate-and-term refinances
- Options to qualify without tax returns using liquid assets, personal or business bank statements or property rental income
- FICO credit score minimums as low as 660
Not everyone needs a jumbo mortgage, but depending on the value of the home you want to finance and your own financial strategy, it may be your best or your only choice for home financing. To learn about your options for jumbo or other types of home financing, please get in touch.