Jumbo Loans

Jumbo loans are defined as mortgage loans that exceed the conforming loan limit set by the Federal Housing Finance Agency (FHFA). In most areas, this limit is currently $548,250, but it can be higher in some high-cost areas. Borrowers who are seeking to finance a home purchase that exceeds this limit must take out a jumbo loan.

Jumbo loans typically carry higher interest rates than conforming loans, due to the increased risk associated with lending a large amount of money. Borrowers who are taking out a jumbo loan should be prepared to pay a higher interest rate, which can result in higher monthly payments and an increased overall cost of the loan.

Jumbo loan lenders typically have stricter credit requirements than conventional mortgage lenders, as they are taking on a larger amount of risk. Borrowers who are taking out a jumbo loan should be prepared to provide a high credit score, a low debt-to-income ratio, and a substantial down payment.

Jumbo loans typically require a larger down payment than conventional mortgages, as the lender is taking on a higher level of risk. Borrowers who are taking out a jumbo loan should be prepared to make a down payment of 20% or more, which can make the loan more expensive and difficult to qualify for. In some cases, lenders may require a higher down payment for jumbo loans, depending on the loan amount and the credit profile of the borrower.