Jumbo Loans
Jumbo loans are designed for properties that exceed the conforming loan limits, typically in higher-priced real estate markets. Because these loans are larger, lenders often require more stringent qualifications, such as a higher credit score and a significant down payment, sometimes as much as 20% or more.
Additionally, jumbo loans often come with higher interest rates to account for the increased risk to the lender. These loans are ideal for buyers looking to purchase luxury homes or properties in competitive housing markets where home prices exceed standard limits.
Frequently Asked Questions
A jumbo loan is a mortgage that exceeds the loan limits set by Fannie Mae and Freddie Mac, typically used to finance high-value properties. Unlike conventional loans, jumbo loans don’t have government backing, so they usually come with stricter credit, income, and down payment requirements.
Qualifying for a jumbo loan often requires a high credit score (usually 700+), a larger down payment (often 10-20%), and a low debt-to-income (DTI) ratio. Lenders also typically want to see significant cash reserves, especially given the higher loan amount.
Interest rates on jumbo loans can be slightly higher than conventional loans due to the increased risk for lenders, though the difference has narrowed in recent years. Rates can vary widely, so it’s wise to compare offers from multiple lenders to secure the best terms.