Regular conventional loans as well as any government loans have certain loan limits established by Fannie Mae/Freddie Mac(Conventional) or by the government agencies(FHA,USDA & VA). These limits vary depending on the area but in the high cost areas the limit is $727,750. Obviously, this amount falls short for certain number of customers purchasing or refinancing properties in expensive neighborhoods.
The term Jumbo refers to loans much higher than traditional limits. However, each lender has their own definition of when they consider a loan to be Jumbo. For some lenders it is a loan higher than $400K while for others could be higher than $500K, etc. What really matters is that we work with several lenders to provide residential loans up to $3M. With this size loan there are certain requirements to be met as it pertains to:
- Credit scores
- Down payment or loan-to-value(LTV) – this is the loan amount divided by the value of the property
- Purpose – purchase vs. refinance
- Use of property - owner occupying home vs. second home. No investment homes allowed.
- Type of Employment - employed vs. self employed
- Type of Property – single family vs. condo
- Loan size
Following are just some of the requirements existing today for Jumbo loans:
- Credit Scores – this varies from lender to lender but generally it can be anywhere between 650-700 depending on purpose, use and type of employment. For important information regarding your credit score check out the What is a credit score page and also our blog.
- LTV – maximum LTV can be from 50%-80% depending on loan size, purpose, type of property and use.
- Loan program – only adjustable and/or interest only. Home equity lines of credit are allowed.
- Loan size – can be anywhere between $450K-$3M.
- Income Documentation – paystubs, W2’s and/or tax returns may be necessary depending on type of employment.
- Type of Property – can be single family homes, town homes or condos.
- Down Payment – this will be determine by maximum LTV allowed as specified above. Therefore, it can be anywhere between 20%-50% depending on loan size, purpose, type of property and use.
- Job History – minimum of 2 years of employment with proper income to support the higher monthly payment.
There are many other detailed requirements but these should give you an idea of what is necessary to generate a loan of this nature. The important part is that we have lenders that specialize in higher size loans. Give us a call or email us for additional details.