A type of mortgage known as a “Jumbo Loan” is used to finance large mortgage amounts, frequently for luxury homes. Jumbo loans fall under the category of “non-conforming” loans because they don’t meet the standards set by Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency, which regulates them (FHFA).
A maximum amount for loans that Fannie Mae, Freddie Mac, and the FHFA will purchase from lenders is set each year. The “conforming loan limit” refers to this highest amount (CLL). Jumbo loans are those that are larger than this.
The maximum size of jumbo loans in California varies by county. The CCL is $647,200 on average and can reach $970,800 in most counties.
As a trusted mortgage broker for jumbo loans at Midgate Mortgage, we make the process of applying and getting a loan stress-free. Contact us by calling 310-791-0854.
How do Jumbo Loans work?
Like any other mortgage loan, a jumbo mortgage loan can be applied for similarly. A lender will require you to complete an application and submit financial information about your employment, income, assets, and debt. These details, along with your credit score, will be used by the lender to decide whether you qualify for a jumbo loan and will receive loan approval.
Many lenders require a FICO® Score of 720 or better for many jumbo loans, according to the credit bureau Experian®. A debt-to-income (DTI) ratio of no higher than 43% is what most lenders seek. DTI is calculated as your monthly income before taxes divided by your total monthly expenses. To determine if you will have the money to repay the loan, lenders will compute this.
Remember that each lender will have their own qualifying criteria that borrowers must meet.
Limits and rates for jumbo loans in California
The jumbo loan limit in California varies depending on the county where you’re trying to buy a house. The CCL is $647,200 on average and can reach $970,800 in most counties.
Jumbo mortgage rates are typically more expensive than conforming loan rates. This is due to the increased risk that lenders assume when making larger loans. However, rates for jumbo mortgages have recently become more competitive as rates for conventional loans have increased.
For more information on jumbo loans in California, please call an expert mortgage broker for jumbo loans at 310-791-0854.
Jumbo loan benefits
- increased loan limits. If you’re approved for a jumbo loan, you can borrow more money and buy a more expensive home.
- Loan adaptability Primary residences, second homes, and investment properties can all be bought with jumbos.
- options for loans Mortgages with fixed rates and those with adjustable rates, as well as loans with various term lengths, are just a few of the options.
Requirements for jumbo loans
- Credit rating. A FICO of 720 or higher may be necessary for lenders.
- income prerequisite. There is no minimum income requirement for borrowers, but you must provide documentation of your earnings.
- the ratio of debt to income (DTI). The majority of lenders demand a DTI of under 43%.
- monetary reserves Are prepared to demonstrate that you have enough cash on hand to pay for one year’s worth of obligations. The principal, interest, property tax, and homeowners insurance would all be covered by reserves.
- Documentation. You’ll have to present evidence of your income, tax returns, bank statements, and evidence of your possessions and liabilities.
- Appraisal. The lender must appraise the value of the home. If the property’s value exceeds $1,000,000, the lender may require an appraisal.
How to get a jumbo loan
As a first step, gather all the paperwork you might be required to give the lender during the pre-approval or application process. Pre-approval for the loan is an option that will speed up the mortgage application process and make it easier for you to find a home.
Do jumbo loans qualify as conventional loans?
Any mortgage loan that is not guaranteed by a government body is referred to as conventional (such as FHA, VA, or USDA). Jumbo loans are therefore regarded as conventional even though they are non-conforming.
Where can I get a jumbo loan?
Speak to a mortgage representative at the bank or credit union you currently use. Applying for a mortgage with a lender who is familiar with you and has your financial data in their system may result in more favorable rates and terms.
However, if you are looking for an experienced mortgage broker for jumbo loans in California, call 310-791-0854 to speak to a Midgate Mortgage team member today.