Jumbo Loans
What are Jumbo Loans?
Jumbo Loans are loans offered on properties that are priced above the conforming loan limit set by Freddie Mac and Fannie Mae. These limits change from county to county and are periodically increased to match market demands. As of 2024, the limit set by Fannie Mae and Freddie Mac is $766,500 but can be as high as $1,149,825 in certain counties. These loans are not able to be sold on the secondary market, so they are seen as riskier to some lenders.
How do Jumbo Loans Work?
Jumbo loans work the same way as any other mortgage. They are amortized over typically 30 years but can be for shorter terms. They allow borrowers to take out loans larger than the limit set by Freddie Mac and Fannie Mae, ranging from $766,550 - $1,149,825, depending on the area where the property is located.
Qualifications for a Jumbo Loan
Necessary qualifications for a jumbo loan may include:
- Minimum down payments starting at 10% but can be over 20%
- A credit score of at least 700
- Typically lenders will cap the eligible DTI (debt-to-income) ratio at 43%
- Cash reserves of up to one year of mortgage payments in the bank
- Proof of employment and income through W2's, tax returns, and bank statements