Understanding Jumbo Loans

A conventional mortgage sometimes isn’t enough to finance a home. That’s where a jumbo loan* comes in. Eligible borrowers can use jumbo loans for properties valued higher than current conforming loan limits. Effective January 1, the Federal Housing Finance Agency (FHFA) announced that the 2022 conforming loan limits increased to $647,200. This means any one-unit property valued over that amount needs a jumbo loan. However, in high-cost areas, the conforming loan limit may be higher, so a loan exceeding $647,200 might not be considered jumbo.

Why Choose a Jumbo Loan?

Jumbo loans are ideal for purchasing luxury properties or buying in high-priced areas where home values exceed conforming loan limits. They can finance a primary home, investment properties, or vacation homes. These loans provide flexibility for those looking to invest in more expensive real estate.

Requirements for Jumbo Loans

Since jumbo loans aren’t backed by Fannie Mae or Freddie Mac, they’re riskier for lenders. Therefore, guidelines are stricter than conventional loans. Borrowers need a higher credit score and a lower debt-to-income ratio. A large cash reserve increases your chances of approval. Additionally, you may need to provide more extensive documentation, including tax returns, W-2s, 1099s, bank statements, and investment details.

Jumbo Loans vs. Conventional Mortgages

Jumbo loans, aside from the high amount, don’t differ much from conventional mortgages. Borrowers can choose fixed- or adjustable-rate jumbo mortgages with various term options. However, jumbo loans typically require a bigger down payment and may have higher interest rates. Expect higher closing costs due to the larger loan amount.

Achieving Your Dream Home

Sometimes bigger is better when it comes to your dream home. For those requiring higher loan amounts, our jumbo loan can help you enjoy lower payment options with competitive rates. Contact a Silverton Mortgage professional today. Let us help you dream bigger with our jumbo loan program.

*Example of 90% LTV (10% Cash Down) Jumbo Loan with $725,000.00 sales price. $652,500 loan amount – 30-year fixed rate loan with zero points based on 360 monthly payments at $3,306.12 each (P&I only). Monthly payments do not include required mortgage insurance, taxes, insurance premiums or other applicable escrows. Actual payment amount will be higher. 10% 

cash down payment of $72,500.00 required. Example assumes 700 credit score and includes $1,295 origination fee, 4.537% APR, and 4.5% interest rate as of 12/17/2020. Rate, fees, other charges and terms subject to change. Available loan programs and terms will vary by state.