People ask me all the time about jumbo programs for higher end Properties. It depends on what county you’re in and what the county limits are that would make it a jumbo program. Jumbo programs are a little bit more challenging to qualify for. Here’s what we need, a higher FICO score and a more significant down payment. Now, I do have as low as a 10% down payment, but it requires reserves. Jumbo loans do require a lower debt ratio for a higher loan amount. So, it’s important to think like this. If you were going to lend me $500,000, wouldn’t you want a lot of documentation proving that I can make those payments? Of course, you would. That is how Jumbo lenders think.
Here are some important tips to help prepare you for a JUMBO loan:
1) Credit score – Your credit score must be higher than for FHA, Conventional and VA Loans. With VA and FHA sometimes you can get loans with as low as a 500 Credit score. For conventional loans, there is a 620 bottom score. Competitive Jumbo loans usually need a 680 minimum FICO score. and some lenders require a 740+ for best pricing.
2) Down Payment – While VA loans, and some down payment assistance loans offer Zero down payment. Conventional loans 3% down and FHA loans require 3 ½% down payment. Jumbo loans usually start at 10% down with a very high FICO score and 20% down with a score of 680.
3) Reserves – While many loans do not need months of payments in reserves after the closing. Jumbo loans often need from 6-12 months payments and sometimes even more left over.
4) Debt ratios are also very different from other loans. Conventional loans range from 45-50% of gross income, depending on FICO score. FHA loans will often go to 56.99% debt ratio and can still receive an approval. A VA loan can actually go to 70% in a few cases with lots of residual income left over. With jumbo loans, some will max out at a 35% debt ratio with a 10% down and others will go to 42% or 43% as a max even with great credit.
If you are in the jumbo market but are not sure that you’ll meet the criteria, don’t worry. There are many exceptions to the guidelines that I’ve mentioned. Exceptions will usually result in a higher interest rate due to the added layer of risk to the lender. Loan scenarios are as different as fingerprints. What we’ll do is check your situation and together we’ll Fire Your Landlord!®