What is a Jumbo Mortgage?
A jumbo loan is a high-value home loan that is used to purchase a very expensive property. Jumbo loans are loans that exceed the maximum purchase value of major mortgage investors Fannie Mae and Freddie Mac. If your loan is below the Fannie and Freddie limit, your mortgage lender has the option to sell your loan to one. Of these. by charging interest on the loan itself. However, if the loan value is too high, Fannie and Freddie cannot afford it. This means that giant loans are significantly riskier for lenders than conventional loans and government-guaranteed loans.
The specific loan limits you will need to consider vary depending on where you live. In most parts of the country, the maximum amount you can borrow on a standard conventional single family home loan is $ 510,400. In areas where property values are highest (such as Hawaii and Alaska), the maximum rises to $ 765,600. Typically, you'll need a giant loan if you want a mortgage that's worth more.
There are no restrictions on the type of property you can purchase with a jumbo loan. You are free to use your loan to purchase a primary property, second home, or investment property you plan to rent. As long as you meet your lender's standards, you can use your property however you like. Many buyers are also surprised to learn that jumbo loans have competitive interest rates compared to standard conventional loans. Typically, you'll only pay a fraction of a percentage point more for your giant loan than a conventional loan from the same lender.
Do you need a jumbo mortgage?
You may need a giant mortgage if you are interested in buying a higher value property. However, giant mortgages are riskier for lenders, which means you may find it harder to find a lender willing to service your loan. Let's take a look at some tips you can use to get a higher value home loan with less stress.
- Save more for your down payment.
If you've read a mortgage guide, you probably already know that most people don't pay 20% when buying a home. However, giant loan lenders are much stricter on down payments. They don't have the ability to sell their loan to Fannie or Freddie, so they need to make sure you can pay back everything you borrow. This means that most mortgage lenders require you to deposit at least 20% on their giant loan. If you are buying an investment property, you may need to enter an even higher percentage. - Check your credit.
Contrary to what most first-time home buyers believe, you don't need perfect credit to buy a home. In some cases, you may be able to purchase a home with a rating of up to 500 points. However, giant mortgage lenders require higher down payments to qualify. Your lender may require a score of up to 720 points. Before applying for a loan, you may want to take some time to raise your credit score. Create a plan to pay all your bills on time, check your credit report to make sure there are no old mistakes on your report, and try to limit the use of your credit. All of these steps will work together and help you increase your score over time.
- Remember that you may need more financial documentation.
Giant home equity loans are riskier for lenders, which means you may need to provide more income documentation than usual. Your lender may take years of tax returns, pay slips, and bank statements to show that you are likely to continue paying your bills. If you are self-employed, you may need to provide even more documentation before you are eligible for a loan. Speed up your mortgage process by having these documents on hand before applying.
The 7 best giant mortgage companies
Now that you understand what it takes to get a giant loan, it's time to take a closer look at individual lenders. Let's take a look at some of the best mortgage lenders offering giant loan options.
1. Quicken Loans®: Best Overall for Jumbo Mortgages
Quicken Loans is one of the largest mortgage providers in the country. Rocket Mortgage® can help you quickly and easily apply for a jumbo loan through its Rocket Mortgage® platform. Rocket Mortgage® by Quicken Loans® has streamlined the mortgage process to a few simple steps. Most applicants will receive a decision in just a few minutes, and you may qualify for up to $3 million through the Quicken Loans jumbo loan program. You may even qualify with just 10% down.
Quicken Loans® also offers FHA, VA, USDA and conventional loans.
2. Luxury Mortgage: Best for Self-Employed Professionals
Your lender needs to know that you have a consistent, steady income when you borrow money. This is especially important for a larger jumbo loan, which may reach millions of dollars. You might find it difficult to get the jumbo loan you need because lenders see your fluctuating income as unreliable or they may not consider nontraditional business assets.
Luxury Mortgage provides individualized mortgage solutions if you’re self-employed. Luxury Mortgage’s flexible Asset Qualifier home loan considers nontraditional sources of income and assets — perfect for business owners who have a large percentage of cash tied up in work-related assets. You can borrow up to $6 million with an Asset Qualifier loan and your credit score can be as low as 580 points.
Luxury Mortgage is licensed to lend in Connecticut, Georgia, Illinois, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Washington.
3. Ally: Best for First Time Home Buyers
You might want to consider a mortgage from Ally if your jumbo loan will be the first home loan you’ve ever taken out. Ally offers 24/7 online account access for first time home buyers in most states, which can provide immeasurable peace of mind as you apply for your loan.
You can get up to $4 million in a jumbo loan through Ally; $3 million for a second home. Ally also offers jumbo loans with as little as 10% down and it also offers a variety of information to help you decide which loan might be right for you.
4. SoFi: Best for an Online Mortgage Process
SoFi is an online mortgage provider that offers conventional, jumbo and government-backed mortgages.
SoFi has streamlined the mortgage application process down to the absolute basics — most people will be able to apply for loans in as little as a few minutes.
You’ll be able to borrow up to $1.5 million with 10% down and no PMI.
5. Better.com: Most Competitive Rates
Better.com is another streamlined mortgage lender that offers conventional, jumbo and FHA mortgage loans.
Better.com’s instant rate comparison tool, which allows you to see and compare mortgage rates updated on a minute-to-minute basis.
Better.com even offers a Better Price Guarantee, which allows Better.com’s team to match any competitor’s offer, which ensures that you don’t overpay for your loan.
6. Flagstar: Best for Young Professionals
You might have trouble getting a mortgage loan if you’ve just graduated from a professional school (like medical school or law school) because your current income doesn’t reflect your future earning potential. You may also have a larger-than-usual amount of student debt, which can make you an even riskier candidate for a large jumbo loan.
Flagstar specializes in conventional and jumbo loans for working professionals who are just getting started in their careers. Flagstar’s Professional Loan Program allows young professionals who are still early in their careers access to higher-value loans than they would otherwise qualify for. You can get up to $1.5 million in a loan through Flagstar, and the lender also considers nontraditional business assets when it considers how much you may qualify for.
7. Veterans United: Best for VA Jumbo Loans
You already know that a VA loan is a type of government-backed mortgage loan that allows veterans and active members of the armed forces to buy a home with no money down and no private mortgage insurance. Private mortgage insurance is money you pay to a lender in the event that you default on your mortgage. Did you know that you can also get a VA jumbo loan to buy a more valuable property as well?
Check out Veterans United. Veterans United offers 30-year VA jumbo loans at interest rates comparable to regular VA loans. Veterans United allows you to finance up to $3 million in a home loan with a low down payment and looser credit requirements. The team at Veterans United can also help you learn more about the VA loan process and assist you in getting the paperwork you need to secure your loan.
Financing Your Future Home
Finding the right mortgage loan doesn’t need to be confusing. Start by comparing at least a few different lenders working in your area for current interest rates, loan types offered, customer service quality and loan application process. Remember, a mortgage loan can be a 30-year commitment. Take some time to ensure that you’ve got the best loan for you and your family.