As you are navigating the home-buying or real estate investment process, particularly in high-cost real estate markets, you may come across the term “jumbo loan.” Unlike conventional loans, jumbo loans are designed for purchasing properties that exceed the conforming loan limits set by government-sponsored entities like Fannie Mae and Freddie Mac.
If you’re looking into getting a jumbo loan, we’ve got the answers so some of the most frequently asked questions right here.
What is a jumbo loan?
This loan is a type of mortgage used to finance properties that are too expensive for a conventional conforming loan. The limit for conforming loans varies by location and is determined by the Federal Housing Finance Agency (FHFA). In 2024, for most of the United States, the conforming loan limit is $726,200 for a single-family home. However, in high-cost areas, this limit can be higher. However, in Southern California even the higher limit sometimes doesn’t work for buyers looking to buy large or luxury properties. When the loan amount exceeds these limits, it’s classified as a jumbo loan.
When should someone get one of these loans?
This loan type becomes necessary any time the price of the property you’re purchasing exceeds the conforming loan limit in your area. Even if you’re looking in one of the higher cost counties in California where the FHFA limit is the highest, you may still find that the property you’re looking for exceeds the limit.
For example, if you’re looking at luxury properties, a semi-custom and upgraded new construction home, or a beachfront property, you may not be able to find something that fits within those conventional limits.
The great news is, we have years of experience finding a jumbo loan that works for our clients.
Can you refinance a jumbo loan?
Yes, refinancing these loans is possible. The process is similar to refinancing a conventional mortgage, and we offer cash out refinancing up to $2 million.
Do jumbo loans have fixed or adjustable rates?
These loans are available with both fixed and adjustable interest rates. We can talk with you about the pros and cons of each to help you choose that one that best aligns with your plans.
Is a jumbo loan only for a primary residence?
No, jumbo loans can be used to finance primary residences, second homes, and investment properties. If you’re looking at a luxury investment property or a high end vacation home, a jumbo loan might be the perfect fit.
How do I qualify for a jumbo loan?
A jumbo loan does represent a little more risk for your lender. That means that qualifications are a bit different, too. The great news is, our loans are available with competitive rates and we want to work with you to qualify you. We don’t need your tax returns or P & L, and we can qualify you based on your bank statements.
If you are concerned about the credit score, cash reserves, DTI, or other criteria you’ll need to meet, just reach out to us. We have become experts in finding a solution for our clients, even when it requires creative strategies.
Ready to learn more about applying for a jumbo loan to help you reach your goals? Contact us any time to find out why we’ve been a leader in the industry for decades.
