The Federal Housing Finance Agency has recently announced that they’ve raised conforming loan rates for 2019. Now, in most counties across the country, the conforming loan limit for a single-family home will be $484,350, which marks an increase of $31,250 from the 2018 limits. The new rise in limits means that the federal government has raised the conforming loan limit three years in a row. Any loans above this amount are considered jumbo loans, and in this latest post, we’ll explain what you need to know about jumbo mortgage loans from your local lenders.
You’ll require a higher-than-average credit score
Most jumbo mortgage lenders will require you to have a higher-than-average credit score if you’re in the market for a jumbo loan. A credit score of between 700-720 is often the level lenders look to when evaluating a potential jumbo loan applicant.
You should have a low debt-to-income ratio
In order to pay off your jumbo loan according to the terms of your loan agreement, you must have a low debt-to-income ratio. Ensure that you reduce your debt before beginning the jumbo loan application process. Most lenders have a hard cap of 45% when reviewing debt-to-income ratios for jumbo loans.
You should have cash reserves for one year
Do you have enough cash in the bank to cover one year of mortgage payments on your jumbo loan? This is often a leading consideration for banks when evaluating clients and their loan potential. If you don’t have the free capital, you must be able to explain or show to the financial institution how you intend to pay the loan back within the required term.
You’ll need comprehensive documentation
The documentation you’ll need to show lenders when applying for a jumbo mortgage goes beyond the traditional documentation requirements for a conforming loan. You may be asked for several years of tax documents, as well as financial records related to your income.