What Is a Jumbo Mortgage?
A jumbo mortgage is a viable option for borrowers scoping out a high-priced property with a mortgage that surpasses government-sponsored enterprise limits.
In other words, if a loan exceeds the guidelines set by Fannie Mae and Freddie Mac (values more than $453,000 in most U.S. markets), it’s considered a jumbo mortgage.
Qualifying for a Jumbo Loan
There are a handful of requirements borrowers need to satisfy to obtain jumbo mortgages according to U.S. News.
Typically, the borrower must have:
1. A higher FICO credit score—with the average exceeding 700
2. A debt-to-income limit of 45% or lower
3. Anywhere from three to 24 months’ reserves
4. The ability to afford a larger down payment—around 10% and 20%—to score a lower rate
Jumbo Mortgage Benefits
A hefty mortgage loan affords borrowers the opportunity to step outside the parameter of some Fannie Mae and Freddie Mac guidelines.
For instance, instead of getting two conforming loans—which are under $453,000 in value—to finance their new property, a borrower can opt for a jumbo mortgage for consolidation and simplification.
What’s more, is that jumbo loans are often endowed with more economical rates compared to conforming mortgage loans. Some jumbo loans, like Quontic’s Jumbo Loan, also have favorable terms. These terms can include cash out allowances and offer both fixed and adjustable rates to fit into borrowers’ diverse lifestyles.
