You’ve found your dream home in Phoenix or Scottsdale and worry that you may have to finance a rather hefty loan to turn your dream into a reality. Well, luckily for you, the Federal Housing Finance Agency created a loan bracket for amounts that exceed the conforming loan limit. Loans that exceed the conforming limit are called jumbo loans or jumbo mortgages, and the limit is set at $417,000 (some exceptions). However, the conforming limit depends on the number of units on the property and where the property is located (contiguous US). So for example, if the property has two units, the conforming loan amount increases to $533,850 before it is considered to be in the “jumbo” bracket.
A greater amount of risk is associated with jumbo loans because of the amount that is financed, the number of investors interested, and they tend to be tied with luxury homes and properties. Luxury properties take, on average, longer to sell due to the lack of prospective homebuyers and their values have larger shifts during market swings than lower priced homes. With the higher risk comes a higher interest rate, while the difference in rates may small. The same loan programs are usually offered such as fixed-rate, ARMs, and interest-only home loans.
The qualifying and underwriting process is more or less the same for jumbo loans as it is for conforming loans, except that most times they require two appraisals, instead of one. Lenders will require a larger down payment, usually a credit score greater than 700, a debt-to-income ratio of 43% or less, and 6-12 months of reserve payments.
Hopefully, your dream home is still on the market, knowing that there is an option available now if you thought it was out of reach before! Whatever type of home loan you are looking for, Nova Home Loans in Phoenix is the place for you. To begin applying online today or to request a consultation, from our very best Mortgage Master.