Buying a higher end home or large property has some similarities to the purchase of regular real estate, but there are also many different steps to take in the purchase of a high end property. One of the differences is securing financing for this type of home. If you are shopping for a luxury property and need financing you have probably come across the term jumbo mortgage.
A jumbo mortgage is a home loan for an amount larger than the standard mortgage limits established by regulation. In most areas of the United States this limit is set at $417,000, in areas with higher home prices the limit is set at $625,500.
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Below is the loan limit breakdown of 2016 for different areas across the U.S and U.S. Territories:
- 2,916 counties across the country have a conventional mortgage limit of $417,000
- 108 counties have a limit of $625,500. These areas are high cost housing markets including places like Los Angeles, New York, San Francisco,, etc.
- There are 115 counties with higher price markets but not extremely high with limits between the two previous numbers. An example of this is Denver County, Colorado with a conventional limit of $458,850.
- Some housing markets are extremely high and have a higher limit than $625,500. 4 of Hawaii’s 5 counties have limits between $657,800 and $721,050. Limits are higher in Hawaii, Alaska, Guam, and the Virgin Islands under a long standing regulation.
Qualifying for a Jumbo Loan
The qualification requirements for a jumbo mortgage are a little stricter than with a conventional home loan. Down payment requirements are much higher in many jumbo loans. The down payment varies from lender to lender and could range anywhere from 15% all the way up to 30% for home purchases. A large number of jumbo mortgage lenders require a credit score of 700 or higher, a debt-to-income ratio of 43% or less and 6 to 12 months worth of reserves.
When you go in to get pre approval or approval for a jumbo mortgage you will want to make sure you have solid documentation and proof of all these things to better ensure a smoother loan approval process with less waiting for the proper documents.
As an expert in assisting buyers of larger properties with higher-end price tags, I can help you find the right property and easily follow the steps needed to obtain a jumbo loan. For more information on purchasing properties with larger price tags, contact my office today or please feel free to browse the website.
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