If your Orlando dream home includes six bedrooms, eight bathrooms, a swimming pool, tennis court, and four-car garage, you may be in need of a jumbo loan. The term “jumbo loan” refers to large loan amounts that aren’t completely covered by Fannie Mae and Freddie Mac, and lenders handle them slightly differently from other types of loans.
What is a Jumbo Loan?
In most parts of the United States, a jumbo loan is any loan amount exceeding $417,000. Unlike other mortgages, jumbo loans won’t be completely covered by Fannie Mae or Freddie Mac. These two government entities buy up residential mortgages so that lenders can increase their liquidity and enable more loans, and they set limits on how high the loan amounts they cover can be.
What is Different About a Jumbo Loan?
Because they involve large loan amounts, these loans have slightly different requirements than other loan options:
- Appraisal—The lender may require two appraisals for the property, and they must confirm the value of the home.
- Credit history—In order to be approved for a jumbo loan, you must have very good credit—generally, a FICO score of 700 or more.
- Debt-to-income ratio—The debt-to-income ratio cannot be higher than 45%. Some lenders place the limit slightly lower.
- Down payment—Most lenders will require a down payment of at least 15%, and sometimes up to 30%. There is no PMI available for jumbo loans.
- Interest rates—Jumbo loans usually have higher interest rates than other types of mortgages.
Ready to Buy?
If you are ready to apply for a jumbo loan, talk to a Money Street Mortgage jumbo loan expert about your next steps. We will negotiate the best terms for your loan and walk you through the approval process from start to finish. Call us today!