No matter where you live in the US, jumbo mortgage financing is generally more difficult to find than “agency” financing (“agency” financing typically is a reference to any type of financing that Fannie Mae, Freddie Mac or FHA/VA offers) and has been somewhat difficult to find since the credit crisis began.
Finding jumbo financing isn’t impossible – but it is important to have a general idea of what the jumbo loan market currently looks like. Here are just a few things that you can expect when buying a home and shopping for a jumbo loan:
- Maximum debt to income ratios at 45%
- Minimum credit score of 720 for both borrowers
- Maximum combined loan to value of 90%
- No more than two properties in the same market area
- Rates are generally in the 5.5% to 6.5% range
- When qualifying, it is acceptable to not yet have a property picked out (To Be Determined is acceptable)
- Must be less than 10 acres
- Many lenders will have a pre-pay penalty for the first 2 years
Note: this is just a general guide of what to expect – not a quote from any specific lender. Use these as a rule of thumb when shopping for a jumbo loan – don’t expect that a loan officer will quote you these exact terms.
Now that there is at least some activity in the jumbo loan market, I suspect that in the coming months there will be more lenders enter the market which will lead to more jumbo loan programs and guidelines. But for now, it is simple enough to say that you should be ready to document your income and assets fully as well as see the guidelines above and you should be able to find jumbo financing for your home.
But I don’t guarantee it – and anything can change, including jumbo loan lenders deciding to no longer offer jumbo financing for whatever reason.
Photo: Danilo Rizzuti