The limit for a jumbo loan recently increased nationwide in 2019. The current conforming loan limit for most of Florida, Orange County included is $484,350. Anything mortgage beyond that amount is considered a Jumbo loan. There is also a third category referred to by lenders as a “high balance” conforming loan, reserved for areas where the median home prices are much higher than the rest of the country, south Florida being one example.
In October of each year, the Federal Housing Finance Agency, or FHFA, reviews the national median home value and compares that number with the value from one year prior. If there is an increase, the new conforming loan limit will increase for the following year. This limit is announced in November. If there is no change or if values actually fall, the current limit will remain the same until the time for the next annual review.
One of the first requirements for any mortgage in Orlando is the loan to value (loan amount compared to the value of the property) Most often this value is close as what appears on the sales contract but ultimately the property value is determined by a licensed appraiser. Many Jumbo lenders today require the loan to be below 90%, or even 80% of the property value in some cases. However, new options today are available to qualified buyers up to 95% financing. Read all the Jumbo Loan details here.
Need assistance? Please connect with us 7 days a week.
Mortgage insurance protects the lender for the difference between 80 percent of the value of the property and the amount of down payment. However, private mortgage insurance is not always required with many loans today, even those that exceed 80% loan to value. Many lenders and banks can break up the borrower’s loan into a “combo” 1st and 2nd mortgage to avoid PMI. But buyers should know that jumbo loans with 20%+ down payment will typically offer slightly lower rates with when compared to 10% or 5% down.
Second, jumbo buyers will be required to have better credit compared to other types of loans. Because jumbo lenders can set their own minimum credit guidelines, minimum scores can vary. However, most jumbo loans ask for a credit score of at least 680 with some programs needing a minimum score of 720. When someone applies for a jumbo loan the lender orders both a credit report as well as a credit score.
The credit score is a three-digit number that ranges from 300 to 850 and each credit bureau provides its own score. Even though the three bureaus, Experian, TransUnion, and Equifax all use the same algorithm to calculate these scores, they will almost always be slightly different. The reported scores might read 742, 749 and 738. The lender doesn’t average them together but instead throws out the highest and lowest score and uses the middle one.
Finally, jumbo loan guidelines require a fully documented loan. This is in comparison to so-called “stated” loans or “no doc” programs that require less documentation from the borrower. Borrowers can expect to be asked for verification of gross monthly income as well as show evidence of at least a two-year employment history. This two-year history is verified with two years of tax returns or the last two years of W2 forms. For someone that is self-employed, the last two years of business tax returns will be needed along with a written year-to-date profit and loss statement.
There are also some jumbo programs that don’t ask for W2 forms but do calculate income based upon income reported on the last 12 months of bank statements. This program is reserved for self-employed borrowers with a two-year history of self-employment. The bank statements should show regular monthly income coming from running the business. Borrowers can also expect to sign IRS form 4506-T, which gives the lender permission to request an individual’s tax transcripts directly from the IRS.
To make sure the applicant has sufficient funds to close on a transaction, for the down payment, closing costs and cash reserves, bank statements will be needed. Lenders can also make a written request directly to the banking institution asking how much money is in various accounts. Lenders refer to this request as a Verification of Deposit form, or VOD. Your loan officer will provide a written list of documentation needed to complete the loan file.
Buyers can learn more about all the Jumbo programs by calling us or by submitting the Request Contact form at the top of this page. We are happy to serve all of Florida including Orlando, Windermere, Winter Park, Heathrow, Maitland, Doctor Phillips, Altamonte, Orange, Osceola and Seminole County