Jumbo loans are a valuable option for borrowers looking to purchase more expensive homes, second homes, investment properties, and more in California. Many of today’s most popular mortgages are restricted to certain amounts. Anyone interested in a loan that exceeds the limits of these loan programs will need to consider other options such as the jumbo loan. LoansOnTheWeb.com offers great rates and flexible terms on jumbo loans throughout Campbell, San Jose, Los Gatos, Santa Clara, Cupertino, Saratoga, and Sunnyvale.
Fannie Mae and Freddie Mac purchase most home loans. A loan must meet certain criteria to be eligible for purchase by either of these entities. Eligible loans are called conforming loans, while those that are not are considered nonconforming loans. The conforming loan limit in most counties is $424,100, although in some high-cost areas, the limit is increased to $636,150. Jumbo loans are conventional loans that exceed these amounts. For borrowers looking to purchase luxury homes, second homes, or investment properties in California, the jumbo loan is often a preferred loan option.
Since Fannie Mae or Freddie Mac cannot purchase jumbo loans from lenders, it is not uncommon for lending criteria and credit requirements to be a bit more stringent. On the other hand, since jumbo loans do not need to adhere to Fannie Mae and Freddie Mac guidelines, lenders are able to be flexible with jumbo loan requirements. Although there are no specific requirements, most mortgage companies will follow common industry standards.
Jumbo Loan Requirements
Credit Score – A credit score around 700 will typically be required. Flexibility may be offered in this area depending on income, down payment availability, and other factors.
Down Payment – Historically, a 20% down payment was needed for a jumbo loan and most conventional loans. Today, smaller down payment options may be available if credit and income can support it however, a down payment of 20% allows borrowers to avoid private mortgage insurance (PMI). PMI may be required with smaller down payments.
Debt-to-Income Ratio and Income – A debt-to-income ratio of 43 percent is generally needed. W2 forms, recent paystubs, and other similar documentation will be needed to verify income.
Property – The property being purchased will need to support the purchase price and the mortgage being applied for.
Be prepared to provide documentation that outlines liquid assets, non-liquid assets, and any additional loans you may have when applying for a jumbo loan. This information will be needed to support your ability to repay the loan amount that is being requested. Any information you can gather ahead of time will help to expedite the application process.
Jumbo loans can be an excellent option for California residents interested in purchasing an investment property, a higher-priced home, or even a second home. Contact LoansOnTheWeb.com today for more information on jumbo loans options in Campbell, San Jose, Los Gatos, Santa Clara, Cupertino, Saratoga, and Sunnyvale, or to apply for your jumbo loan today.
