55°F
weather icon Clear

Jumbo mortgages: Low rates, strict terms

Borrowers who need large home loans will find an increasing number of lenders willing to offer jumbo mortgages. They’ll also find low rates. But the qualification requirements remain stringent.

A jumbo loan is a mortgage for more than the conforming limit set by Fannie Mae and Freddie Mac. In most counties, any mortgage of more than $417,000 is a jumbo loan. In counties with high home prices, the conforming limit is higher — up to $625,500. In other places, the limit is between.

Lower jumbo rates

Many lenders and investors who buy jumbo loans from lenders had pulled back from the jumbo market after the 2008 financial crisis. But they’ve slowly returned, says David Adamo, CEO of Luxury Mortgage in Stamford, Connecticut.

“That demand in the secondary market translates into very good rates for borrowers,” Adamo said.

Historically, the interest rate on jumbo loans usually has been higher than the rate on mortgages that fall within Fannie and Freddie limits. But that has changed, and now there is little difference.

Qualifying for a jumbo mortgage

While it may have gotten cheaper to get a jumbo loan, the requirements to get a jumbo mortgage remain strict.

“Qualifying for a jumbo loan is still very tricky,” said Mathew Carson, a mortgage broker at First Capital Group Inc. in San Francisco.

In a high-cost area such as San Francisco, borrowers who need jumbo mortgages aren’t necessarily wealthy. They are middle-income families and even first-time homebuyers.

But if you need a jumbo mortgage, don’t get discouraged — unless you have bad credit.

“Though the barrier of entry for any loan has been raised from the ‘stated-income’ days, quality borrowers will not find it difficult to secure a jumbo loan,” said James Campanella, chief operations officer for City National Bank of Florida based in Miami.

In the eyes of jumbo lenders, a quality borrower is someone with sterling credit, sufficient income, assets and not too much debt.

Most lenders require a minimum credit score of 720 for jumbo mortgages, says Jason Auerbach, former division manager for First Choice Loan Services in New York City, and now a wealth management loan officer for Bank of America. But a few accept lower scores.

Campanella says City National accepts scores as low as 660 depending on the size of the mortgage.

The bank lends up to 80 percent of the home’s value, which is the limit on what most jumbo lenders are willing to lend.

For multimillion dollar homes, lenders generally ask for down payments of 25 percent to 40 percent.

Don't miss the big stories. Like us on Facebook.
MORE STORIES
THE LATEST
Las Vegas builders continue to focus on affordability

Affordability continues to be a buzzword in the Las Vegas housing market with the hope that continued rate cuts by the Federal Reserve during the rest of 2024 and into 2025 will make the valley’s homes more affordable.

Four-story town home lists for nearly $2.3M

Perched on the mountainside, the four-story town home offers an exclusive escape with panoramic views of the Las Vegas Strip. With three balconies and a private pool, the property offers ample space for relaxation and entertaining.

55+ Trilogy Sunstone to release new homesites

Las Vegas-area homebuyers are invited to the grand opening of a brand-new phase of homesites at the 55+Trilogy Sunstone community within the Sunstone master plan in northwest Las Vegas.

Pulte offers three lifestyle options in Summerlin

Pulte Homes, one of 10 national homebuilders in Summerlin, offers three distinctly different housing options in the community to meet various lifestyles.

Midtown, new eco-friendly residences to host open house Oct. 25

The Las Vegas Arts District will soon welcome its newest neighborhood Midtown. The upscale development will host an open house Oct. 25 from 5-8 p.m. at 921 S. Main St. that is open to the public.

Woodside showcases Vireo in Summerlin

With five two- and three-story floor plans from approximately 1,441 square feet to 2,034 square feet, priced from the mid-$400,000s to the mid-$500,000s, Vireo by Woodside Homes is proving popular with buyers in all stages of life seeking to live in the premier master-planned community of Summerlin.

Beazer debuts town homes in Cadence Oct. 19

Beazer Homes’ Cantata Point collection at Cadence offers sleek, contemporary town homes designed for comfort and versatility. Starting from the mid-$300,000s, Cantata Point town homes range between 1,330 square feet and 2,256 square feet of living space, up to four spacious bedrooms and roomy foyers.

KB offers two new Summerlin neighborhoods

KB Home, one of 10 homebuilders in Summerlin, currently offers two neighborhoods in the community’s Kestrel Commons District — Nighthawk and Quail Cove.

Connect with the online sales team rock stars

Tri Pointe’s award-winning online New Home Specialist team of Shannon Marler and Josh Selleck have been busy preparing to introduce new homebuyers to La Cova and to accept interested buyers to the La Cova VIP Priority Group.

Woodside unveils Ashwood in Cadence

Woodside Homes opened its Ashwood neighborhood in Cadence, named one of the nation’s Top 5 master-planned communities by RCLCO.