If you have decided to purchase a pricey home that falls above the federal loan limit, rather than opting for financing options, like multiple mortgages, choosing a jumbo loan offers various benefits, such as:
- Access to a high financing amount (i.e., over a million)
- A convenient substitute than having to apply for multiple mortgages
- Easier to get approved for a second home financing loan with a low downpayment
- Available with fixed and adjustable mortgage rates
The eligibility criteria for these loans are more rigid as the loan amounts are larger, and these are considered riskier for lenders. Although most of the factors considered in the eligibility criteria are the same as when applying for any other type of mortgage loan, the qualifying conditions differ greatly.
The following are the essential eligibility requirements for Jumbo Loans:
High Credit Scores
The lenders require a high credit score as per the FICO Standards, i.e., higher than 700 or more. Thus, having a high credit rating can work in your favor to secure a sizable debt.
When you want to apply for a considerable loan amount, it is crucial to provide sufficient income proof to assure the lenders that you can pay monthly high mortgage payments. Thus, your employment proof, business license, financial statements, and additional income proof will be required.
Lower Debt-to-income Ratios
Lenders will also consider your debt-to-income ratio (DTI) to confirm your current financial situation accurately. Thus, if you have a low DTI ratio (i.e., 45%) they may favor your profile and grant approval without any complications.
Assets and Cash Reserves
There will be a detailed documentation process which is vital in getting the jumbo loan approved. Thus, all paperwork regarding your supporting assets and cash reserves must be impeccable.
At PierPoint Mortgage, we have a highly qualified team to take over the hassle of documentation. Thus, you can rely on our experts to handle all the paperwork for the mortgage application.
The lenders may also require a second appraisal for the property you are planning to buy. It needs to be conducted by a qualified third-party authorized home appraisal officer. The property value should align with your financing goals to get your desired loan approval.
Jumbo loans are typically available with either a fixed interest rate or an adjustable rate, and they come with various terms. So, if you are wondering how to know if you are eligible for a jumbo loan, simply submit your online application today!