Jumbo Loans



Homes with loans exceeding the loan limits set by government sponsored entities (GSEs) are financed through jumbo loans. This financing structure is both suitable and generally preferable for borrowers in the market of luxury homes or who are interested in refinancing a pre-existing large mortgage. Jumbo loans allow borrowers to enjoy larger loans at a lower rate. While traditional loans must conform to the requirements set by Fannie Mae and Freddie Mac, jumbo loans present another option that grants flexibility to prospective home buyers.  

When the amount you want to borrow for your property goes beyond the limits, a jumbo loan lender may require:

  • Stronger credit scores. 
  • More cash in the bank. 
  • Larger down payment.
  • An extra appraisal. 
  • Additional fees.


Qualifying for a jumbo loan is similar to qualifying for a conforming loan. Lenders take monthly income, monthly expenses, excess cash, and credit scores into account when deciding if a borrower qualifies.

Generally if your credit score sits at 700 or higher and you have 6 to 12 months in reserve, you will fit the requirements to qualify for a jumbo loan. For individuals looking to take out a jumbo loan, proof of a substantial income will also be necessary.


For real estate in more expensive markets, like those of New York City and San Francisco, taking out a jumbo loan will assist in paying for pricier properties. These loans also allow for more flexible loan terms, allowing the borrower to adjust the amount of time on the fixed-rate loan or change the mortgage to be the adjustable rate. It also helps you to borrow the full amount of money from one loan instead of having to break it up into two different loans for buying a higher-priced home.

One thing to keep in mind: these loans will naturally come with higher interest rates. To qualify, a good credit history is essential, so double check all credit reports for any potential inaccuracies. In general, being accepted for a jumbo loan is difficult, so you must also be able to prove that your income is high enough to be able to afford monthly mortgage payments.

It is also recommended to avoid investing in any other properties if you have any lingering debt — be it from remaining college loans or medical bills — or you can anticipate a large expense coming quickly. Lenders want to know that you have the funds to pay off the loan, and that you will continue to do so for the years on the loan.

Feel free to contact Lending Corner today for any inquiries about Jumbo Loans!

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Answers to Your Questions

There are a lot of factors to consider when determining how much you can afford, but a good rule of thumb is to not let your monthly mortgage exceed 25% of your monthly take-home pay. Following this guideline will help you manage additional homeownership costs such as maintenance and repairs, while still keeping room for other financial goals like retirement and savings. There are also tons of affordability calculators you can find online, like this one!

Pre-Qualification and Pre-Approval both estimate the loan amount that you are likely to qualify for. This is an important first step in the home buying process to ensure you are looking at the right homes that fit your budget.

Pre-Qualification and Pre-Approval are often used interchangeably and can both help you stand out amongst the homebuyer competition. Both require you to supply an overview of your financial history such as your income, assets, debts, and credit score. However, most people look at pre-qualification as step one and pre-approval as step two because pre-approval requires formal documentation and verification.

The amount of time it takes to close a loan will differ from lender to lender, but a top mortgage lender should be able to close your loan within 30-45 days from application. Not having the proper documentation or having errors in your documentation may result in delays so it’s important to make sure you have all of your materials properly prepared.

Mortgage lenders will require you to provide certain documents in order to assess your ability to repay your loan. The Great Recession was due in part to borrowers not being adequately vetted for their ability to repay their loans. For this reason, the pre-approval process now requires significantly more paperwork. You will be asked to provide documentation regarding your employment and income, savings and assets, and outstanding debt.

Some of these documents include:

  • Tax returns
  • Pay stubs/W-2s
  • Bank statements
  • Credit history
  • Gift letters
  • Renting history
  • Work history

Most conventional loans require at least 5% down, but 20% is typically recommended. Mortgage companies often require borrowers to pay private mortgage insurance until they have 20% equity in the home. This additional fee is put in place to protect mortgage companies against borrowers who stop making payments on time.

Although this is standard, there are also many different loan programs that can help you purchase a home with less than 5% down. For example, some Veterans can qualify for VA loans that allow them to purchase a home with 0% down and no PMI. FHA loans can also allow first time homebuyers to purchase a home with as little as 3.5% down.

Your lender will be able to assess your financial situation and determine which programs you qualify for and which ones are best for your financial goals.


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