Jumbo Loan - Oakstar Funding

Jumbo Mortgages

In 2022, Jumbo loans are defined as any loan exceeding conforming loan limits of $647,200. if you are financing a home that exceeds conventional limits, you may need a jumbo loan.

What is a jumbo mortgage home loan?

Jumbo mortgages are home loans that exceed conforming loan limits set by the Federal Housing Finance Agency (FHFA). A jumbo mortgage is considered a non-conforming conventional loan. Since these loans are larger, they are considered riskier for lenders and have stricter credit requirements.

A jumbo loan is available with a fixed or adjustable rate and a variety of terms. These loans typically have a higher interest rate than conforming loans.

Considerations for a Jumbo Mortgage:

Higher Purchase Limits

Jumbo mortgages can exceed the conforming loan limit, currently $647,200 for a single-family home in Texas.

Property Type

Jumbo loans can be used to purchase various property types including primary residences, vacation homes, and investment properties.

Cash Reserves

You’re more likely to be approved for a Jumbo loan if you have significant cash reserves. Most lenders want to see that you have the savings to cover 6-12 months of mortgage payments.

Jumbo loan requirements and qualifications:

Credit History – To qualify for a jumbo mortgage, the borrower must have very good credit, which generally means a FICO score of at least 700 for loans up to $1 million and higher thereafter.
Down Payment – Most jumbo loans require a down payment of at least 20% for primary homes and larger down payments for secondary homes or multi-family units.
Financial Strength – The borrower must have a debt-to-income ratio below 43% and be able to show 6 months of additional reserves in order to qualify for a jumbo mortgage loan.
Property Appraisal – The property appraisal must support the purchase price for the home and the mortgage the borrower wants. Some Jumbo products may require 2 property appraisals.

Jumbo loans provide a financing option for people looking to purchase more expensive homes. The strict financial requirements associated with jumbo loans may cause some people to choose to make a larger down payment or set up their financing as a 1st and 2nd loan to lower their primary loan amount to meet conventional conforming standards. If you’re not sure which home loan is right for you, speak to a member of the OakStar team. We can walk you through your options and help you choose the mortgage solution that fits your needs.