A jumbo, or non-conforming, mortgage loan is one that exceeds the maximum allowed value of a loan for a particular area. In most instances, the limit for a conforming loan is $453,100, though that price varies slightly throughout the country.

If you’re looking for a new luxury home with a non-conforming price limit, a jumbo loan may be appropriate for you and your family. With the higher cost risk associated with a such a large loan, there are, of course, more stringent standards.

Because these loans are so large, most lenders create their own underwriting standards for jumbos. With conforming loans, Freddie or Fannie Mae will typically create the rules for underwriting because those are the companies most likely to buy out your loan from your initial lender. That won’t be the case with a jumbo loan. Your lender will likely keep your loan, and thus, be setting the standards for lending.

They’ll be looking for excellent credit scores, even as high as 740, as well as a debt-to-income ratio lower than 45%. As with all loans, you’ll need to have your home appraised, which will assure your lender that they are lending you an appropriate amount for the value of the home.

If you’re interested in purchasing a luxury home, contact us and get started on the jumbo loan lending process!

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