Like their names, jumbo home mortgages and super jumbo home mortgages are large and even larger. In some counties in the U.S., a jumbo mortgage is any mortgage bigger than $484,350. This isn’t the case in Los Angeles and Orange counties. As higher-priced real estate markets, jumbo mortgages on single family homes in LA and Orange counties are any amount over $726,525. A super jumbo mortgage is typically one that is over $1.5M and in higher priced area’s in California, especially Southern California and in Northern California we routinely see super jumbo loans in the $10M to $20M loan amount range.
The size of jumbo loans isn’t the only thing that’s different about them. We’ve put together a list of 10 things to know about jumbo home mortgages:
1) Jumbo loans are “nonconforming” loans. This means they don’t “conform” to the limits for loans that are sold to Fannie Mae or Freddie Mac. These government-sponsored mortgage associations protect lenders against defaults and resell mortgages to investors.
2) Jumbo loans are non-conforming but still conventional mortgages. A conventional mortgage is a non-government insured mortgage. FHA mortgages have the mortgage insurance insured by the government.
3) Jumbo loan and Super Jumbo loan interest rates can be fixed or adjustable APR (annual percentage rate).
4) Jumbo loan credit scores should be strong. Most jumbo mortgage lenders ask for credit scores of 700 to 720 or higher.
5) Your DTI should be low. Lenders like to see a debt-to-income ratio (DTI) of less than 41% up to 45%. You need to have relatively low debt for a regular jumbo home loan. However, there are many other Jumbo and Super Jumbo loan options now available with slighltly higher interest rates that allow up to 50% DTI ratios.
6) You’ll need cash reserves. Could you cover up to a year’s worth of mortgage payments from your liquid cash reserves? Many jumbo mortgage lenders will ask for documentation of cash reserves.
7) Jumbo mortgages need more documentation. The majority of jumbo mortgages require thorough documentation, including tax returns, investment accounts and bank statements. Business profit and loss information may also be required. In some cases Jumbo and Super Jumbo mortgages may be available with limited streamlined documentation such as not using any tax returns, but instead using bank statements and/or profit and loss statements.
8) You may need more than one appraisal. Because jumbo mortgages represent a risk to lenders, they may request a second property appraisal to confirm property value.
9) Higher down payment. You can get a low or even no down payment on some loans, but not for jumbo mortgages. You will need to put down at least 10% of the purchase price up to 20% or more.
10) Interest rates differ. For a long time, jumbo mortgages and super jumbo loans had higher interest rates than conforming loans. But in housing markets like California, you can often find rates competitive with, or in certain cases lower than, the rates offered on smaller conventional mortgages.
You can find jumbo mortgages that will fit your needs, home purchase plans, and financial goals. Work with a jumbo mortgage specialist who understands how these larger mortgages are financed and approved. You will soon find yourself owning that dream property you desire. These jumbo and super jumbo mortgage loans are also available for non US Citizens, including both Permenent Residents Green Card Holders, and also Foreign Nationals. Super Jumbo Loans include those that can be $10 Million or $15 Million or higher loan amounts.
