Aurora Jumbo Home Loans

A jumbo loan is a mortgage used to fund properties exceeding the Federal Housing Finance Agency’s loan limits (FHFA). Lenders consider these loans high-risk, and borrowers must meet specific criteria to be eligible.

Jumbo Loan Requirements

In general, there are several requirements you must meet to be eligible for a jumbo mortgage in Colorado. It’s crucial to note that jumbo loan criteria vary greatly per lender, and some lenders may be more accommodating than others.

• Credit Score

You usually need a higher credit score than required for a conventional loan to get approved for a jumbo loan. Your credit score helps lenders assess your financial responsibility. Each lender will have a different minimum credit score requirement, although a score of 700 or more is generally considered good.

• Income

You must show a substantial and stable income to cover your monthly mortgage payments. The particular income criteria will vary depending on the lender and your other financial circumstances. Still, you should anticipate needing a consistent source of income and a good debt-to-income ratio.

• Debt-to-Income

Your monthly debt payments divided by your monthly income are known as your DTI ratio. DTI ratios of 43% or less are typically preferred by lenders, though some may be more lenient if you have a strong credit score or significant assets.

• Down Payment

Although certain lenders might permit a smaller down payment in specific circumstances, most jumbo lenders demand a down payment of at least 20% of the home’s purchase price.

• Reserves

Lenders want to know if you have adequate savings to pay your mortgage for several months. You will generally need at least 6–12 months of reserves; however, the exact amount will depend on the lender and the loan amount.

Pros and Cons Of A Jumbo Loan

Jumbo home loans come with perks and drawbacks. Here are some of the key pros and cons of a jumbo loan:

Pros:

• Higher Loan Limits

A jumbo loan allows you to borrow more than the limits imposed by Fannie Mae and Freddie Mac, which can be beneficial if you need to finance an expensive property.

• One Single Loan

Jumbo loans allow you to finance a sizable amount of money with only one loan instead of taking out several loans.

• More Funding

Unlike FHA, conventional, and VA loans, jumbo loans allow you to borrow more money. You could buy a bigger or more expensive property as a result.

Cons:

• Higher Interest Rate

Higher interest rates are associated with jumbo loans than with conventional loans because of the higher perceived risk associated with the loan.

• High Credit Score

The credit score needed to obtain a jumbo loan is often higher than that required to get a conventional loan, making it more difficult for some borrowers to receive financing.

• Closing Costs

Jumbo loan closing costs are typically higher than conventional loans, costing thousands of dollars.

• Larger Down Payment

Jumbo loans typically require a larger down payment than conventional loans, which can be a significant financial burden for some borrowers. Expect to make a minimum down payment of 20% and possibly more, depending on the lender and loan amount.

Apply For A Jumbo Loan In Colorado

As a direct mortgage lender, Capital Home Mortgage Colorado is committed to providing a home-buying experience unlike any other. You can reach one of our Colorado loan professionals at (303) 226-1177 to get started on your jumbo loan application.