Hundreds of thousands of people will require a mortgage at some point in their lifetimes. That’s why there are so many different types of mortgage loans available to serve the diversity of the nation.
So then, what is a jumbo loan?
If you’ve always wondered what a jumbo loan is, you’re in the right place. Here, we’re outlining the answer for you in a brief but detailed post that can help you determine if it’s the right type of loan for you.
Keep reading to learn more.
What Is a Jumbo Loan?
Jumbo vs conventional loans are different in many ways. The main thing to be concerned with is the actual size of the loan in terms of the cost of your potential mortgage.
Let’s take a look at what it all entails.
What Are the Requirements and Limitations for a Jumbo Loan?
For starters, the loan you intend to finance must be at least $765,600. It must be for a land purchase, mortgage, rate, term, or cash-out refinance, or investment property or investment refinance.
The type of jumbo loan you need will depend on these factors.
Jumbo Loan Land Purchase
Regardless of the amount of land you are purchasing, it cannot be zoned/used for agricultural use. The other major terms for this type of jumbo loan detail that you cannot purchase more than 40 acres, although, there are some limitations for loans for less than 20 acres.
Jumbo Loan for a Mortgage
So, what is a jumbo mortgage loan? You may wish to contact the good folks at Fairway Mortgage to learn more.
In the meantime, the main takeaway is that you’ll need at least 20% down and a credit score above 700. Also, your DTI may not exceed 43%.
Jumbo Loan Refinance Rates and Terms
Most jumbo loan refinance terms for loans above $1 million require that you have at least 20% equity in your home. You must also have a credit score of at least 700 and a DTI that does not exceed 43%. For a home appraised at $2 million or more, you may need to have at least 40% equity in your home.
Jumbo Loan Cash-Out Refinance
Cash-out refinance jumbo loans are a little trickier than other jumbo loans.
There are strict stipulations related to the amount of equity in your home, your credit scores, and DTI. The stipulations are also different depending on the type of property you’re refinancing such as a primary residence or investment property.
Is a Jumbo Loan Right For You?
Knowing what is considered a jumbo loan helps to outline your needs. If you’re still asking what is a jumbo loan, we suggest you reach out to your local banker to have them describe in more detail what will be best for you and your family.
We certainly hope this post helps to get you pointed in the right direction. If you found this post helpful, we encourage you to check out the rest of our blog for additional tips and tricks on living your best life.