Jumbo Loan

Jumbo loans are ideal for buying homes in pricier areas, offering several benefits:

• Flexible Terms: Borrow varying amounts for different property types.
• Co-borrowers Welcome: You can have a co-signer, even if they won't live in the home.
• Rate Options: Choose from fixed or adjustable rates to suit your budget.
• Higher Loan Limits: Access more funds than standard loans allow.
• Versatile Use: Finance your main home, investment property, or vacation home (VA Jumbo loans are only for primary residences).

Jumbo loans are designed for larger amounts, so they come with stricter qualifications compared to other loans. Here’s what you need to know:

• Property Types: You can use a Jumbo loan for primary residences, investment properties, or vacation homes. An appraisal may be required.

• Down Payment: At least 10% down is needed. If you put down less than 20%, you might need private mortgage insurance (PMI).

• Credit Score: You generally need a minimum credit score of 680, though some loans might require up to 740.

• Debt-to-Income Ratio: This should not exceed 45%, but some lenders may allow up to 50% under certain conditions.

• Cash Reserves: Lenders typically want to see enough savings to cover six months of mortgage payments, sometimes up to a year.

• Income Verification: Expect to show proof of a high, steady income over the past two years, including tax information and details on any liquid assets.

• Loan-to-Value Ratio (LTV): The maximum LTV is usually 80%, meaning if you buy a home valued at $100,000, you should put down at least 20%.

Each lender has specific requirements, so check your loan agreement for details. Our team at New American Funding is here to help you navigate these requirements and find the loan that fits your needs. 

Jumbo loans are non-conforming loans that exceed government-set limits and don't align with Fannie Mae or Freddie Mac requirements. Unlike standard loans, they are funded by private lenders, not federal agencies, which means their terms can vary significantly between lenders.

You can refinance a Jumbo loan without specific time limits or equity requirements, but be prepared for strict lender criteria. Jumbo loans carry more risk for lenders, especially without mortgage insurance, leading to higher standards.

To refinance, you'll likely need a credit score up to 760, a debt-to-income ratio no higher than 36%, and sufficient cash reserves to cover six months to a year of mortgage payments.

Consider a cash-out refinance as well, which allows you to access funds for investments, property upgrades, or other financial needs.

What is a Jumbo Mortgage?

A Jumbo mortgage exceeds the loan limits set by Fannie Mae and Freddie Mac. For 2024, this limit is $766,550 for a single-family home in most states.

Do You Need a 20% Down Payment for a Jumbo Mortgage?

Not necessarily. Some lenders may accept as little as 10-15% down, depending on factors like your loan-to-value ratio, assets, and the type of property. Investment properties and second homes often require larger down payments compared to primary residences.

Do Jumbo Loans Require PMI?

Yes, similar to conventional loans, Jumbo loans require private mortgage insurance (PMI) if your down payment is less than 20%.

Does the VA Offer Jumbo Loans?

Yes, the VA provides Jumbo loans for veterans. Eligible service members and their spouses can use VA benefits to secure a Jumbo loan with no down payment and no private mortgage insurance (PMI).