Jumbo Loans in California
A jumbo loan is a mortgage loan that exceeds the level of principle (the amount borrowed) eligible for purchase by Fannie Mae and Freddie Mac.
Jumbo mortgages have loan amounts above conventional conforming loan limits ($548,250 for most counties across CA some counties have conforming loan limits as high as $822,475 for the year 2021). This standard is set by the two government-sponsored enterprises Fannie Mae and Freddie Mac. They set the limit on the maximum value of any individual mortgage they will purchase from a lender.
Fannie Mae (FNMA) and Freddie Mac (FHLMC) are large agencies that purchase the bulk of U.S. residential mortgages from banks and other lenders, allowing them to free up liquidity to lend more mortgages.
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What lenders think about Jumbo Loans in California
Most lenders consider jumbo loans in California to be a riskier transaction than conventional loans because a larger sum of money is ‘bet’ on a single loan vs. spreading that same dollar amount amongst multiple transactions.
Imagine lending $2 Million on one loan vs. ten $200,000 loans. For some lenders, spreading the risk over multiple properties and borrowers is their strategy. Spectrum One Mortgage has investors that prefer to work with jumbo loans. Keep in mind, the risk associated with jumbo loans is why the mortgage rates and down payment/ equity requirements are typically more than for a conforming loan amount.
How to Qualify For a Jumbo Mortgage?
Business / Employment –
Whether you’re qualifying for a $500,000 conforming mortgage, or a $4.7 million jumbo loan mortgage, it is evident the underwriter will want to be able to prove you can afford the payment in the long term.
As we fill in your loan application, it is important for you to be accurate and detailed about explaining what you do for a living and the likelihood of continued employment.
If you are self–employed, having proof of a company web site, business licenses and other relevant information are helpful to include with a loan application.
Just a little FYI…Some underwriters have been known to search for your name or company on Google, so it’s probably a good idea to know what type of results and impression they’ll find if they choose to do some digging.
Proof of assets is very important and they must “make sense” in relation to the income on the application.
For instance, if a borrower states an income of $40,000 a month, there needs to be sufficient assets and investments to back it up. Any large expenditures or deductions from checking accounts will need a letter of explanation and a paper trail. If a lender can look at bank statements and see that you have significant cash reserves and a low debt-to-income ratio, this is favorable.
Credit Scores –
Our jumbo loan lenders are typically looking to see credit scores above 700. Anything showing on public records and IRS records will need to be documented and explained.
The majority of our jumbo loan lenders require 2 appraisals to get loan approval. This is to ensure the property’s true value as assessors can have differing opinions.
Down Payment –
Spectrum One Mortgage has jumbo loan programs that start with as little as 5% to 10% down. Call Jackie for more information.
Finding the right lender can require a fair amount of homework when searching for a jumbo loan on your own. Working with an experienced mortgage broker can cut out the step of shopping around and doing research on several different lenders.
If you would like more information on JUMBO loans or would like to get pre-approved, please call Jackie for a No Cost, No Obligation consultation. Spectrum One Mortgage can issue pre-approval letters for Jumbo Loans within 24 hours. Call Jackie at 949 600-0944