A jumbo loan is, essentially, another name for a non-conforming mortgage, which are loans that do not conform to requirements set by major mortgage loan companies Freddie Mac and Fannie Mae. Jumbo loans usually require a higher down payment than conventional loans.
These loans exceed loan limits set by the government, and if you are purchasing a property that calls for a loan higher than the local limit, this is the only time you would need to consider taking out a jumbo loan for a home in Southern California. When a loan amount exceeds the acceptable limit to be considered as ‘conforming’ to Fannie Mae and Freddie Mac guidelines, it is considered a Jumbo Loan.
Qualifying for a jumbo loan is very 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 New York City, Los Angeles, and San Francisco (and for more expensive homes), taking out a jumbo loan will assist in paying for these 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 adjustable rate.
One thing to keep in mind: these loans will naturally come with higher interest rates. Unlike safe conforming loans, jumbo loans come with some risks. 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 in Southern California 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 LoanLeaders of America, Inc. today! today! for any inquiries about jumbo loans!
Extremely helpful and professional throughout the whole home buying process. Danny Schultz was available for anything we needed and treated every request with the urgency and efficiency you look for when dealing with the stressful task of buying a house. I have already recommended Loanleaders of America to my friends and family and will definitely continue too in the future. Thank you so much to Danny and the whole team at Loanleaders for making us feel like we were in good hands throughout every step of the way! If there was an option for more than 5 stars, this team deserves it!Jake M. from Chino, CA
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Rob has assisted my husband, myself and our families with many, many refinances over the past 7 years. He is very knowledgeable, responsive and goes the extra mile to find the right solution for each client. I would recommend him without hesitation!R Marienlun from Martinez, CA
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