Understanding Jumbo Mortgages | If you are in the market for a home priced over $765,000 and you also want to get a mortgage, understanding jumbo mortgages is key!

What is a jumbo mortgage?

Jumbo mortgage loans are large mortgages, specifically larger than conforming loan limits. In Montgomery County, the 2020 conforming loan limit is $765,600.

What is a conforming loan?

A conforming loan is a mortgage that meets Fannie Mae/Freddie Mac guidelines.

What are the qualifications needed to get a jumbo loan?

Because jumbo loans are not standard, the qualifications you need to meet vary from investor to investor.

Jumbo loans do not have private mortgage insurance so the downpayment required can be more than for conforming loans. Lenders typically require 20% down. There are exceptions, such as 10% down with 18 months worth of mortgage payments available in an account at closing. If the loan amount is over $1.5 million, the lender may require 30% down. If you are looking at houses listed for $2.0 million or more, you should talk with a lender early in the process to understand what downpayment you are likely to need.

Because jumbo loans are not standard, the way they qualify buyers is different than conforming loans. For instance, they may count income differently and can make exceptions to the rule. Borrowers will likely need to have 700+ credit scores. Some lenders will require borrowers to have several months of reserves of mortgage payments in their bank account.

If you are self-employed (own more than 25%) of your business, allow for extra processing time, both at the start to pre-qualify and for closing the loan.

Need Help?

Does this sound like a good mortgage product for you? Give me a call and I would be happy to connect you with a lender I trust who can help you understand this mortgage product and whether or not it fits your needs.