Who says you have to drain all your cash reserves to buy your dream home? Well, thanks to jumbo loans, a large and expensive single family home purchase mortgage, is now easy! You don’t always have to be a cash buyer to become a home owner in a pricey market. Read on to find out more about the jumbo loan and eligibility requirements.
What is a Jumbo Home Loan?
Like the name suggests, a jumbo mortgage loan is a very large home loan. It is a loan that exceeds the conforming loan limit imposed by Fannie Mae & Freddie Mac (the 2 government sponsored agencies that buy loans from lenders). In most places in Florida, the conforming limit imposed by Fannie Mae and Freddie Mac is $424,100. However, this limit is greater in those places where the cost of living is higher. Fannie and Freddie are willing to guarantee loans up to the conforming loan limit, not beyond it.
If we take a look at Florida, conforming loan limit in counties like Broward, Manatee, Miami-Dade, Palm Beach and Sarasota is $453,100. But the limits are higher in Monroe – $529,000.
Jumbo loans are ideal for Fla home buyers looking for high-end homes. These high balance loans are designed to simplify home buying in pricey markets by covering the full cost of the loan, so there is no need for borrowers to drain their cash reserves.
Benefits of a Jumbo Loan
Once borrowers qualify for jumbo loans, there is no need to take out two or more loans to purchase. And just like conventional mortgages, jumbo loans can be obtained at a fixed and an adjustable rate- including short 10 or 15 year fixed rates to longer 30-year rate.
Historically, the rate of a jumbo loan was higher than a conventional loan mortgage rate but not as much these days. The gap between conforming and jumbo mortgages has reduced significantly to spur home sales and economic growth, making jumbo loans extremely affordable for buyers.
Other perks of jumbo loans include:
- No PMI (Private Mortgage Insurance) requirements with most lenders
- Interest on loans up to $1 million is tax deductible
Eligibility Requirements for a Jumbo Mortgage Loan
Now let us take a quick look at the eligibility/qualification requirements for a jumbo loan. To qualify for a jumbo loan, a borrower should expect:
- To make at least 10 percent of the purchase as down payment. The down payment for this loan is higher typically because there is no PMI requirement. In select cases, a down payment of only 5% is required
- Document your income – 2-year min history for self-employed borrowers
- The maximum debt-to-income ratio should not be more than 45 percent
- Should have at least 3-12 months worth of reserve savings in his/her bank account after closing. The required reserve amount can differ based on credit, loan amount, down payment, etc. Lenders like to see borrower’s reserves as it enables them to ensure that the borrower has the ability to make monthly loan payments.
Latest Jumbo mortgage loan-to-value limits and credit standards for 2018.
- Up to 95% LTV to $2,000,000 with 700+ credit score
- Up to 90% LTV to $3,000,000 with 720+ credit score
- Up to 85% LTV to $3,500,000 with 740+ credit score
Florida Veterans have a second option thanks to the VA Jumbo Loan. Learn more about VA Jumbo Mortgage here.
Florida home buyers that have questions about Jumbo loans or current interest rates should contact us at Ph: 800-871-2636. You can also submit the “Request Contact” form at the top of your screen for fast service.
FL Jumbo Loans – Complete Guide – serving Miami Dade, Naples, Sarasota, Key Largo, Pembroke Pines, Coral Gables, Boca Raton, Monroe, Broward and Collier County. Update 2018