FHA, USDA, VA, and similar government-backed loan programs set limits on the size of the loan available through each program. Those who are interested in purchasing homes with a purchase price that exceeds these limits will need to consider alternatives. One such alternative is the jumbo loan. Jumbo loans are a valuable option for borrowers looking to purchase more expensive homes in Texas. At Vince Gutierrez Mortgage, we offer low rates and flexible terms on jumbo loans throughout Spring, Texas.
Conforming loans are conventional loans that are eligible for purchase by Freddie Mae or Fannie Mac. To be considered a conforming loan, a mortgage must meet certain criteria set forth by these entities. Currently, a conforming loan cannot exceed $424,100, although in some high-cost areas, a loan can reach as high as $636,150 and still be considered conforming. Jumbo loans are simply conventional loans that exceed these limits and are therefore, ineligible for purchase. Since Fannie Mae and Freddie Mac cannot purchase these loans, they are considered a bit riskier for lenders. Lending criteria and credit requirements can be more stringent with a jumbo loan. Since jumbo loans do not need to adhere to the same Fannie Mae and Freddie Mac guidelines that conforming loans do, lenders can set their own requirements for the jumbo loans they offer. While each lender can set unique requirements, most will follow common industry standards.
Spring Jumbo Loan Requirements
Credit Score – Lenders often ask to see a credit score of at least 700 for jumbo loans. Flexibility may be afforded in this area depending on factors such as income and down payment availability.
Down Payment – Historically, a 20% down payment is required for a jumbo loan. A 20% down payment also allows borrowers to avoid private mortgage insurance (PMI). Smaller down payment requirements are becoming increasingly available for borrowers who have better than average credit and income. If a lower down payment is desired, PMI may be required.
Debt-to-Income Ratio and Income – A debt-to-income ratio of 43 percent is typically required, although there may be flexibility in this area based on income and down payment availability. W2 forms, recent paystubs, and other similar documentation will be needed at the time of application to verify income.
Property – The property being purchased will need to support the purchase price and the mortgage being applied for.
Documentation that outlines liquid assets, non-liquid assets, and any additional loans you may have will be needed, so be prepared to provide this as well. This information further supports your ability to repay the loan you are requesting. Any information you can gather ahead of time will help to expedite the application process.
If you are interested in purchasing an investment property, a higher-priced home, or even a second home in Spring, a Jumbo loan is a great option. At Vince Gutierrez Mortgage, we offer low rates and flexible terms on jumbo loans throughout Texas. Contact us today for more information on Spring, Texas, jumbo loans.