Jumbo Loan

What You Need to Know About Jumbo Loan Financing

If you're in the market for a higher-priced home, you may need a jumbo loan to finance your purchase. Here's everything you need to know about jumbo loans:

Credit Requirements: To qualify for a jumbo loan, you'll need to have a good credit score and a low debt-to-income ratio. Your credit score must be at least 620, and your debt-to-income ratio cannot exceed 45%.

Income and Employment Requirements: Lenders will want to verify your income and employment history. If you receive social security income, you'll need to provide proof of current receipt or an award letter. For alimony or child support income, you'll need to provide evidence of at least 6 months of receipt.

Assets: You'll need to have assets to cover your down payment and closing costs, as well as reserves. Loan amounts of $2 million and above require 18 months of reserves.

Property Requirements: Jumbo loans come with property requirements that may differ from conventional loans. For example, cash-out proceeds cannot be used for any personal use on investment properties. All files must have a full appraisal, and appraisal waivers are not acceptable. Homeowner's insurance must cover the greater of 80% of the replacement cost or the loan amount, and reserves must be available to cover subject PITI for 18 months on loan amounts of $2 million and above.