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  • What is a Jumbo Loan?

    A Jumbo Loan is a mortgage used to finance properties that are too expensive for a conventional conforming loan. The maximum amount for a conforming loan is $510,400 in most counties, as determined by the Federal Housing Finance Agency (FHFA). Homes that exceed the local conforming loan limit require a jumbo loan.

    Also called non-conforming conventional mortgages, Jumbo Loans are considered riskier for lenders because these loans can’t be guaranteed by Fannie and Freddie, meaning the lender is not protected from losses if a borrower defaults. Jumbo loans are typically available with either a fixed interest rate or an adjustable rate, and they come with a variety of terms.

  • Key Points

    • Cash Reserves
      You’re more likely to be approved for a jumbo loan if you have ample cash in the bank. It’s not uncommon for lenders to ask jumbo loan borrowers to show they have enough cash reserves to cover one year of mortgage payments.
    • Documentation
      To prove your financial health, you’ll need extensive documentation, perhaps more than for a conforming loan. You should be prepared to hand over your full tax returns, W-2s and 1099s when applying, in addition to bank statements and information on any investment accounts.
    • Appraisals
      Some lenders may require a second appraisal of the home you’re planning to purchase.
    • Qualifying for a Jumbo Loan
      Underwriting criteria for jumbo loans are stricter because the loans are larger and riskier for lenders.
    • Credit Score
      Lenders may require your FICO score to be higher than 700, and sometimes as high as 720, to qualify for a jumbo loan.