Jumbo Loans

What is a Jumbo loan?

If you’re looking to purchase an investment property or mansion but need more money than a conventional loan can provide, then the jumbo loan is an option for you. These loans are used when the amount of money needed is greater than that supplied with a typical conforming loan. The Federal Housing Finance Agency sets limits on conforming loans around the country. These maximums are usually around $500,000 but can be up to $800,000 in more expensive areas. Any loan greater than the limit in that area is considered to be a jumbo loan. These mortgage loans are available at a fixed or adjustable rate and for up to 30 years, depending on the lender.

Jumbo Loan Requirements

Who qualifies for a Jumbo loan?

Jumbo loans tend to have stricter qualification requirements due to the risk factor for banks. The loans are not government-backed, and because of the amount of money that is being leant, banks have to be careful about who receives a jumbo loan. Banks will want a record of stable employment with a high enough income and a large cash reserve, as well as a larger minimum down payment. Some banks even require enough cash set aside for a full year of mortgage payments. You are often expected to have a credit score of at least 720, and there are more stringent debt-to-income limits.

Benefits of Jumbo Mortgage Loans

Jumbo loans can allow for a lot of flexibility. One benefit that doesn’t apply to any government-backed loans is that the purchased property doesn’t have to be your primary residence. It can be your house, a vacation home, or even an investment property. Jumbo loan rates aren’t necessarily high either. It all depends on how good of a loan you can attain and with which bank. Most importantly, these loans are the only ones which can potentially lend you enough money to cover a purchase that’s larger than conforming loans can.

Disadvantages of Jumbo Mortgage Loans

Because of the size of these loans, banks often require a minimum down payment of 20%. After all, the banks are at risk and will want to make sure you are someone who has sufficient mastery over their finances so as to be able to save up such a large amount, and that you have enough skin in the game and will not readily allow the loan to default. With all the risk, it’s even harder to meet jumbo loan qualifications. You will likely need a significantly higher-than-average annual income, and a large amount of cash set aside. Additionally, the rates on jumbo loans are generally higher than for conforming loans. Jumbo loans will also have higher closing costs and fees than a normal conventional loan.

Applying for a Jumbo Mortgage Loan

If you are interested in a jumbo loan, the first step is to find the right lender. Ask your lender what you will need in order to get a preapproval letter, and take the time to collect all the necessary documentation. Once you have been pre approved, it’s time to find a home in your price range and make an offer. Once your offer is accepted, the lender will submit your application to be underwritten, and once it is approved, you’re ready to close the loan.


If you’re in need of a jumbo loan, then Brian the lender may be able to help. To discuss your options or get started, call 706-973-7933 and Brian will take care of you.

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