A Jumbo loan is any loan that is considered “non-conforming” with regard to the dollar amount of the loan. In our market, that means anything over $484,350 (the general limit, unless in a designated high-cost area, for conventional fixed rate or adjustable rate loans). Being a Jumbo loan means it has it’s own rules: typically a higher credit score and down-payment are required, as well as substantial reserve funds to show financial stability.
There is a wide range of products that would fall into this category: guidelines for a loan amount of $650,000 are not likely to be the same as those for a loan of $2,200, 000. If you are considering a larger loan amount, it is very important to discuss everything with a loan officer early in the process of looking at property. It’s much better to know what is required and have all in order ahead of time so that when you find that perfect home, you will have a smooth process to closing.
Like conventional loans, Jumbo loans are available in fixed rates or adjustable rates. In some instances a downpayment of 20% or 25% is required, as well as verifiable reserve assets. The amounts will vary with the loan size as well as with the lender. Jumbo loans are very individualized by the lender offering the loan, so if one product doesn’t appear as though it will work, there may be another down the street that does work. There are products requiring only 5% down, but you’ll still need to meet the guidelines of good credit and some reserve funds. A mortgage broker will know those differences and shop for you to see if there is a program that will work for you!