A "Jumbo Loan" is a non-conforming loan that exceeds the conforming loan limit of $484,350 set by the GSEs Fannie Mae (FNMA) and Freddie Mac (FHLMC).
Usually borrowers inquire about prequalifying for jumbo financing in upscale neighborhoods and high cost counties throughout the U.S. typically found in California, Colorado, Washington, New York, New Jersey, Connecticut, DC metro, beachfront areas of Florida, and parts of Texas. Many of California's large cities such as Los Angeles, Orange County, San Diego, San Francisco Bay area allow higher conforming loan limits up to $726,525 for a home.
Are You Buying A Home That Requires A Jumbo Loan?
If you’re searching for a home priced over $502,000 and don’t want a starter home, and you know your income qualifies or will increase in the near future, a jumbo loan might very well be the right choice for you. Moreover, your down payment can still be as low as 3.5% in certain areas using an FHA jumbo.
What To Expect From Lenders
Because a larger amount of money is secured by a single property, most lenders consider jumbo loans to be a riskier deal than conventional loans.
For example, a $1.25 million dollar loan on a $2 million dollar property versus a few conforming loans of $484,350 on three properties.
With the increased risk, the guidelines become stricter to qualify such as a larger down payment, more liquid assets, reliability of income and so on.
Furthermore, while jumbo lender “A” may require 25% down, jumbo lender “B” may only ask the borrower to put just 10% down because you are a medical doctor or lawyer just starting in the field and your income is highly likely to increase substantially over the years. In this scenario, lender “B” is offering a portfolio product to borrowers in specific geographic areas.
Houses in major West coast cities
Homeowners and buyers living in the Los Angeles metro, San Diego, San Francisco, Seattle, Portland and other major cities have neighborhoods which require jumbo financing when conforming limits or FHA loans are not sufficient.
Purchase or Refinance Jumbo Loan Program Options.
- 30 or 15 Year Fixed-Rate
- 10 Year Fixed Rate (30 Year Amortization)
- 7 Year Fixed ARMs
- 5 Year Fixed ARMs
- 3 Year Fixed ARMs
- Primary Residence
- Second Homes
- 2 to 4 units
- Vacation Property (single family residence)
- Townhome, Condominium