Jumbo Loans
A jumbo loan is a loan that exceeds the conforming loan limits as set by Fannie Mae and Freddie Mac. As of 2022, the limit is $647,200 for most of the US, apart from Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where the limit is $970,800. Rates tend to be a bit higher on jumbo loans because lenders generally have a higher risk.
Jumbo loans are commonly used to finance luxury properties or homes in highly competitive real estate markets where prices exceed the standard loan limits. Because these loans are not backed by Fannie Mae or Freddie Mac, lenders often have stricter qualification requirements, such as higher credit scores, larger down payments, and strong income documentation. While they can open the door to purchasing higher-priced homes, it’s important to be prepared for the more rigorous approval process and slightly higher interest rates.
Jumbo Loan Characteristics
1) A jumbo loan exceeds the conforming loan limits set by Fannie Mae and Freddie Mac, making it larger than most standard mortgages
2) Interest rates on jumbo loans are typically higher than on conforming loans due to the increased risk for lenders
3) Jumbo loans are not guaranteed or insured by government-sponsored enterprises like Fannie Mae or Freddie Mac
4) Borrowers usually need a higher credit score to qualify for a jumbo loan compared to standard mortgages
5) Lenders often require a larger down payment, sometimes 20% or more, for jumbo loan approval
6) Strong income documentation and proof of financial stability are typically required to demonstrate repayment ability
7) Jumbo loans are commonly used to finance luxury homes or properties in high-cost real estate markets
8) While they allow buyers to purchase higher-priced homes, the approval process can be more stringent and time-consuming than for standard mortgages
5) VA loans do not require mortgage insurance, which can save borrowers money on their monthly payments
6) VA loans have flexible credit requirements, which can help borrowers with less-than-perfect credit still qualify for a mortgage
7) VA loans can be used to purchase a variety of property types, including single-family homes, multi-unit properties, and condominiums
8) VA loans allow for options for refinancing, including streamline refinancing and cash-out refinancing, which can help borrowers lower their monthly mortgage payments or access equity in their home.
Disclaimer: Johnnie Fleming, NMLS #1177346 – NEXA Mortgage ("LD," "We," "Us," "Our") is exempt from mortgage and NMLS licensing for the states we lend in. Our loan products require a business purpose, and the property must be used as a non-owner-occupied investment property, also known as a rental property. Our rates, loan terms, and loan conditions are only offered to qualified borrowers, and may vary based on loan product, credit score, real estate investment experience, deal structure, property state, and several other applicable considerations. Our rates, loan terms, and quotes, are subject to change daily, at any time, with or without notice. Loans requiring less documentation may result in a higher interest rate and higher annual percentage rate ("APR").
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