The jumbo mortgage loans are the non-conforming loans exceeding the maximum amount set as the conventional limit. This loan limit for any conforming loans is set by the government-sponsored enterprise, GSE, Freddie Mac, and Fannie Mae. Currently, the maximum loan amount for a conventional loan is set at $453,100 and any loan that exceeds this is classified under the conforming jumbo loan.
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Jumbo loan limits
The breakdown of the new jumbo limits as from January 1, 2018, according to the Federal Housing Finance Agency is as follows:
- One hundred eight counties have limits of $679,650 for single-unit properties. These counties are deemed the highest-cost housing market areas and include New York, San Francisco, and Los Angeles.
- The other 2,196 counties have the normal $453,100 limit
- One hundred fifteen counties fall between $679,650 and $1,019,457 and fall under the higher than normal prices. These areas include Hawaii, US Virgin Islands, Guam, and Alaska.
Jumbo loan credit requirements
The jumbo purchase loan is different from the conventional loan. This means that the credit score requirements are much higher, and applicants must have a 680 or higher credit score. Average jumbo mortgage borrowers have an average FICO score of 740 and above.
Since the situation of the jumbo loan applicants varies from one person to the other, the loan-to-value ratio depends on personal factors. Nevertheless, an average jumbo loan applicant must have a minimum of 10% down payment. More often than not, a 20% down payment is required to qualify for a jumbo purchase loan. Depending on the property being purchased as well as the situation of the borrower, the down payment can be as high as 25-30%.
Asset and reserve requirement
This is a different requirement for conventional loans. Asset reserves are defined in terms of the Insurance (PITI) payment, monthly principal, taxes, and interest. A month of the reserve is equal to a PITI payment month. The asset reserve requirement varies from a low of 6 months to several years’ worth of reserves, and this depends on the borrower’s situation and the size of the loan. Applicants must present all the documents containing the asset reserves. The higher the amount of money in the reserves, the higher the chances of getting approved for the Arizona jumbo purchase loan.
In most cases, the rates of interest for the jumbo purchase loans are an adjustable-rate mortgage, ARM. The fixed jumbo loans are not easy to find and are higher compared to traditional loans. Often, borrowers for the jumbo purchase loans get a 5, 7 or 10-year ARM where they can sell the home before the maturity of the loan. Most borrowers go for the adjustable mortgage loan since they don’t plan to stay in the home for long.
Summary of requirements
- Higher credit scores
- Larger down payment
- Lower debt-to-income, DTI ration
- More reserves
- Higher interest rates in comparison to the conforming loans
Arizona Mortgage Pros provide jumbo purchase loans with low costs and best rates to all borrowers. Our jumbo purchase loans in Arizona are competitive and easier to qualify for compared to other lenders. We open our doors to all and are always ready to answer your queries on Jumbo purchase loans Arizona. Contact us now.