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What is a Jumbo Loan?

Jumbo Loans are a type of mortgage used to finance properties that are typically too expensive for normal conforming loan. In most countries, the max amount allowed for a conforming loan is just over $500,000, which is determined by the Federal Housing Finance Agency (FHFA). Therefore, any loan that exceeds this amount requires a Jumbo Loan, which can go all the way up to $2,500,000.

These Jumbo Loans are often called non-conforming conventional mortgages because they are considered riskier for lenders. That’s because these loan types are unable to be guaranteed by Fannie and Freddie, which means the lender is not protected from losses if the borrower defaults.

What kind of Jumbo Loans are available?

The two basic types of Jumbo loans are a fixed interest rate or an adjustable rate loan. Both can constructed with a wide variety of terms to fit your needs. Our mortgage team in Corona, CA can help you qualify for a Jumbo Loan to get the home you’ve always wanted in the Orange County area.

How do I qualify for a Jumbo Loan?

Since Jumbo Loans are much larger than traditional loans, the underwriting process and criteria are much more demanding. The lender is taking on more risk with a Jumbo Loan, so many more factors will be involved with this loan type.

Credit score

Most lenders will require your FICO score to be at least 700 to qualify for a jumbo loan.

Debt-to-Income ratio

Lenders will also take into consideration your debt-to-income ratio (DTI), to make sure you don’t overextend yourself, though they may be more lenient if you have some cash reserves.

Cash reserves

Having a good amount of cash already in your bank is a sure way to increase your changes of getting approved for a Jumbo Loan. If you currently have at least enough to cover your first year mortgage payments, you’re looking good.

Documentation

As mentioned before, the riskiness involved with a Jumbo Loan means that the lender will need to perform a thorough vetting process, which includes extensive documentation on your current financial status. Be prepared to provide your full tax returns, W-2’s and 1099’s when submitting your application. You should be prepared to hand over your full tax returns, W-2s, 1099s, bank statements and any information on investment accounts.

Appraisals

Don’t be surprised if some lenders require a second appraisal of the home you’re planning to purchase. Pizarro Mortgage Banking will walk you through the entire process to help ensure you get the home of your dreams.

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