A jumbo loan, also known as a non-conforming mortgage, is a loan that does not fit the guidelines of Fannie Mae and Freddie Mac. In 2019, the conforming loan size limit for a single-family home was raised to $484,350 in the U.S., but may be as much as $726,525 in specific high-cost markets.
Some examples of cities in high-cost areas are Los Angeles, San Francisco, Orange County, San Diego, Ventura, San Jose, and other neighborhoods with multi-million dollar homes. Loans greater than these limits for a single-family home (or two- to -four unit conforming loans) are called jumbo mortgages. What's conidered a jumbo loan may vary greatly depending on the county where the property is located.
Debt-to-income ratios (DTI).
There’s some flexibility with non-conforming loans for qualified borrowers. To obtain the best possible rate, you’ll want your DTI to be 38 or less. Otherwise, very competitive rates are offered for borrowers with a DTI of 43 or less. As amazing as it may sound, even a 50 DTI jumbo loan is available on 90-percent financing.
Borrowers may be able to qualify with middle FICO scores from 650 and above. To be approved for the best programs with lower down payment, you will need a score of 700 or higher. A 740 middle score is necessary for the 5-percent down jumbo mortgage.
Flexible income documentation.
The income documentation allowed for jumbo borrowers can be very flexible. For example, if you were self-employed in the same industry for the last two years, some jumbo loans only need your most recent filed tax return, just one year. Additionally, a self-employed borrower can use a year of bank statements to verify employment income or asset statements if there’s more than $500,000 in the accounts.
Less than 20 percent down without mortgage insurance.
You may qualify for a jumbo loan with a:
5-percent down payment up to $2 million. This means a homebuyer can purchase a $2.1 million home and get 95-percent financing.
10-percent down payment up to $3 million. This works on a home listed for $3.3 million.
In contrast to conforming loans, mortgage insurance (MI) is not necessary. Typically, the MI for a jumbo is included in the rate which tends to be about .375 - .50 percent more and requires debt-to-income ratios below 43.
FAST Loan Closings
We have closed loans in less than 15 days (2 weeks), if you have:
- a loan request under $1 million
- a minimum 10-percent down payment or 15% equity on a refinance
- copies of last 2 years of 1040 tax returns (and business returns if required)
- 2 years of recent employment/self-employment and debt-to-income ratios below 45
- a 720 middle credit score or higher
- no 30-day late payments for rent or mortgage in the last 12 months
Buying or refinancing a home worth $4 millon or more?
We have some attractive jumbo loan programs such as:
1. Depends on the program and availability. 2 out of 3 loan products offered require a DTI of 38 or less.