If you are purchasing a high-priced home, you might need to take out a jumbo mortgage loan, as there are limits to the home costs a conventional mortgage loan will cover. Keep reading to find out how to get a mortgage for $1 million or more.
What Is a Jumbo Loan?
A jumbo mortgage loan is a home loan that exceeds conforming loan limits. In most of the U.S., the 2018 maximum conforming loan limit for one-unit properties is $453,100, according to the Federal Housing Finance Agency. In certain high-cost areas, the limit is $679,650.
What Are the Benefits to Jumbo Mortgage Loans?
A jumbo mortgage loan is useful — and likely necessary — if you wish to purchase a high-end, luxury home. There are two main benefits to jumbo mortgage loans:
- Higher purchase limits: Jumbo loans can exceed the conforming loan limits.
- Competitive rates: Rates can be lower for jumbo mortgage versus conventional mortgage loans, and interest rates for jumbo loans have reached historic lows in recent years, according to U.S. Bank.
Jumbo Mortgage Loan Rates
The interest rate on your jumbo loan will depend on your lender and the terms of your loan. Here’s a look at some of the rates that are currently available for a 30-year fixed-rate jumbo loan:
|Jumbo Mortgage Loan Rates: Comparison for 30-Year Fixed-Rate Loan|
|Bank of America||4.500%||4.592%|
|Information accurate as of Sept. 14, 2018.|
How to Qualify for a Jumbo Loan
Unfortunately, just because you want to live in a luxurious mansion, it doesn’t mean you’ll automatically be approved for the jumbo loan you need to afford it. Only applicants who meet certain criteria will be approved for a jumbo home loan. Generally, jumbo loan applicants should have the following qualifications, according to U.S. Bank:
- Very good credit: Applicants for a jumbo home loan should have a FICO score of 740 or higher
- Low debt-to-income ratio: The maximum debt-to-income ratio for jumbo loans is 45 percent
You will also need to have a home appraisal prior to applying for the loan that supports the purchase price for the home, as well as the mortgage you want.
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