- Most popular government-backed loan programs and certain conventional loan options are restricted to certain amounts. If you need a loan that exceeds these amounts, you will need to look to alternative programs. One of the most common alternatives is the Jumbo loan. Jumbo loans are a valuable option for borrowers looking to purchase more expensive homes in California. At Fairway Independent Mortgage Company, we offer great rates and flexible terms on jumbo loans throughout Walnut Creek, Concord, Lafayette, and Danville.
Freddie Mae and Fannie Mac purchase most conventional loans offered by lenders. Certain criteria must be met before either entity will purchase a loan. Loans that meet these criteria are considered conforming loans and those that do not are called nonconforming loans. Conforming loans cannot exceed $424,100, although in some high-cost areas, loans are available up to $636,150. Jumbo loans are conventional loans that exceed these limits. They are often the preferred home loan for borrowers looking for luxury homes, second homes, or investment properties.
Credit requirements can be a bit more stringent with jumbo loans since they cannot be sold to Fannie Mae or Freddie Mac. On the other hand, lenders can also be flexible with borrowers since jumbo loans do not need to adhere to the same Fannie Mae and Freddie Mac guidelines that conforming loans do. While each can set their own unique requirements, most mortgage companies will follow common industry standards.
California Jumbo Loan Requirements
- Credit Score – A credit score around 700 is generally needed. We may be able to offer flexibility in this area depending on factors such as income and down payment availability.
- Down Payment – Historically, a 20% down payment would be required required for a jumbo loan. For those with better than average income and credit, smaller down payment options may be available.
- Debt-to-Income Ratio and Income – A debt-to-income ratio of 43 percent is generally required although this may vary on a case by case basis. 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.
Be prepared to provide documentation that outlines liquid assets, non-liquid assets, and any additional loans you may have when applying for a Jumbo loan. This information is used to help support your ability to repay the loan amount that is being requested.
For California residents interested in purchasing an investment property, a higher-priced home, or even a second home, Jumbo loans are an excellent option. Contact Fairway Independent Mortgage Company today for more information on jumbo loans options in Walnut Creek, Concord, Lafayette, and Danville, or to apply for your jumbo loan today.