COVID-19 has led to many changes in the housing industry, including historically low interest rates and changes to qualifying criteria. Some homebuyers purchasing a high-cost or luxury home have found Jumbo home loans harder to obtain, as many lenders have tightened eligibility requirements for these types of loans.
What Is A Jumbo Home Loan?
A Jumbo loan, also known as a non-conforming loan, is a mortgage that is above the conforming loan limit set by the Federal Housing Finance Authority. Currently, the conforming loan limit is $510,400 for a single-family home. In higher priced areas the limit can go up to $765,600, depending on the county where the property is located.
Click here to view the conforming loan limit map to see the loan limits for your county >
Are Jumbo Mortgages Currently Difficult To Get Financed?
Jumbo home loans are considered high-risk loans by many lenders because they can’t be sold to government agencies like Fannie Mae and Freddie Mac (unlike conforming
, and VA home loans
). Instead, they are serviced by the mortgage lender who closed the loan or sold off to private investors. Investor interest in buying these mortgages has decreased since the economic slump caused by the COVID-19 pandemic. As a result, many mortgage lenders have stopped offering them or tightened eligibility requirements, increasing the applicant’s minimum credit score and deposit amount.
The Good News For Jumbo Borrowers
You don't have to give up on that dream kitchen! Jumbo mortgages are still available through Certainty Home Loans.
Borrowers should have a good credit score and a low credit to debt ratio. Credit scores are important in determining the interest rate that homebuyers or refinancing homeowners receive for a mortgage. The interest rate then impacts the amount of your monthly mortgage payment for the term of your home loan. You can receive a free credit report from each of the credit agencies from FreeCreditReport.com
so you can see your credit score and check that there are no errors on your credit report before you meet with a mortgage lender.
Jumbo borrowers should expect their mortgage lender to do a final check on their pre-approval documentation to ensure nothing has changed in their financial situation, as well as last-minute employment verification, before heading to the closing table.
How To Apply For A Jumbo Loan
If you live in a city where houses typically cost more than conforming home loans limits, or you want to purchase a luxury home, you should start by speaking with a Certainty mortgage professional in your area. They will assess your specific situation so you can feel confident before you start house hunting.
We're here to ensure confidence in your homebuying journey. Find a Loan Originator
today to see how much dream home you can afford!
Aug 11, 2020