Written by - February 01, 2023
Getting Approved for Jumbo Loans: What You Need to Know
If you’re considering a Jumbo loan, you’re likely getting ready to purchase a high-priced home. A Jumbo loan is a mortgage loan for a home purchase that’s above the conforming loan limit set by the Federal Housing Finance Agency (FHFA). While there are a few criteria that differ between lenders, here’s what you need to know to increase your chances of getting approved for a Jumbo loan:
The Requirements
Lenders typically look for the following to determine if you are qualified:
The Process
The application process for a Jumbo mortgage is similar to a conventional loan. You’ll provide documentation such as bank and brokerage statements, and income tax returns. Since Jumbo loans are not backed by federal agencies, you’ll need to show proof of property insurance before closing.
The Challenges
Higher interest rates: The interest rates on Jumbo loans are usually higher than conventional loans. However, lenders often offer different payment options to reduce the overall borrowing costs.
Stringent Requirements: Jumbo borrowers must meet strict requirements or guidelines to get approval for the loan.
Down Payment: Traditionally, 20% or more down payment has been required on jumbo loans; although, some lenders now allow for as little as 10% down.
Tips for Success
Provide Proof of Income: Lenders usually wants to see your income at a level that supports your proposed mortgage payment
Establish Cash Reserves: You'll want to establish enough cash reserves (including your down payment) so that you can make your mortgage payment for 6-12 months In case of a financial emergency.
Work with a Jumbo Lender: Work with a lender who specializes in Jumbo loans. This can improve your chances of getting approved since they’ll have a better understanding of the underwriting guidelines and what the right fit is for you.
Avoid Lifestyle Changes: You want your application to be stable and predictable, so avoid making any big changes (Buying a new car etc.) prior to applying.
Research: Take the time to research and compare rates, terms, and qualification criteria from different lenders.
Additionally, if you are in the market for a Jumbo loan, Mortgage Brokers Pro can help. Our knowledgeable loan officers can help guide you through the process and answer any questions you may have. Learn more about our Jumbo loan options today.