Jumbo Home Loans In New Mexico

What is a Jumbo Mortgage?

A jumbo mortgage, also known as a jumbo loan, exceeds the conforming loan limits established by the Federal Housing Finance Agency (FHFA). Conforming loans meet the criteria established by government-sponsored agencies such as Fannie Mae and Freddie Mac, which purchase and package most U.S. mortgages for investors.

Jumbo mortgages are designed for borrowers whose loan balance exceeds the conforming loan limits. These limits are calculated annually by the FHFA and can vary by state and even by county. Since jumbo loans do not conform to these limits, they are considered non-conforming loans and lack the guarantees accompanying conforming loans.

Jumbo loans allow borrowers to borrow more money to purchase a more expensive home. Nevertheless, because jumbo loans lack the same guarantees as conforming loans, debtors are typically subjected to more scrutiny and may incur higher borrowing costs.

Benefits of a Jumbo Loan

Compared to other types of home loans, jumbo loans offer several advantages, especially when financing high-priced properties. Among the benefits of jumbo loans are the following:

• Opportunity to borrow more money:

Jumbo loans enable you to borrow more than the conforming loan limits established by the FHFA, allowing you to purchase more expensive properties, such as luxury homes or properties in desirable neighborhoods or communities.

• Competitive interest rates:

Even though jumbo loans may have slightly higher interest rates than conforming loans due to the higher risk for lenders, jumbo loans typically offer competitive interest rates.

• Availability of VA Jumbo loans:

Jumbo loans are also available through the Veterans Administration (VA) for qualified borrowers, which means eligible veterans can experience the benefits of a VA loan with excellent jumbo interest rates without being subject to loan limits.

• Flexible terms:

Jumbo loans offer a range of terms, including 15- to 30-year fixed-rate mortgages and 3- to 10-year adjustable-rate mortgages. This provides borrowers with options more tailored to their requirements and financial circumstances.

Due to the more significant loan amounts and increased risk for lenders, jumbo loans may have more stringent qualification requirements, such as a lower debt-to-income ratio and higher credit scores.

Qualification Requirements of a Jumbo Mortgage

Due to the increased risk associated with more significant loan amounts, jumbo mortgage eligibility requirements tend to be stricter than those for conventional loans. Among the essential qualifications for a jumbo mortgage are the following:

• Higher credit scores:

Jumbo loans typically have a higher credit score requirement than conventional loans. While some lenders may accept a credit score of 680 or above, others may demand a score of 720 or above.

• Low debt-to-income ratio:

For a jumbo loan, a borrower’s DTI ratio, which compares their monthly income to their reoccurring debt obligations, should be low. Some lenders may require a DTI ratio of 43% or less, while others favor a ratio of 36% or less.

• Adequate cash reserves:

A “reserve” in a mortgage refers to the savings balances that a borrower has set aside and will still have after closing on their home buy. These funds are used as emergency savings to show lenders that the user can keep paying their mortgage even if they lose their job or have other unexpected financial problems.

Most of the time, a borrower’s mortgage savings are measured by how many months’ worth of mortgage payments they could pay with their other assets. The mortgage payment comprises the monthly payment for the principal amount, interest on the loan, property taxes, and insurance fees.

Applicants for jumbo loans are frequently anticipated to have substantial liquid assets to demonstrate their ability to manage larger mortgage payments.

• Stable employment history:

Lenders typically seek evidence of stable employment, such as the borrower’s tenure at their current position and the number of jobs held in the past.

• Higher down payment:

Jumbo loans may require a down payment of 15% to 30% of the home’s purchase price, with at least 20% down to avoid paying private mortgage insurance (PMI).

Please remember that these qualifying standards may differ between lenders and be influenced by factors such as the type of property and the borrower’s financial status. Please contact us if you have any questions or require additional assistance.

Apply for a Jumbo Loan in Florida

If you are looking for a property that is more than the conforming loan limit, Capital Home Mortgage can help you with a jumbo loan. From application through funding, we have complete control over your file. 

Call (505) 484-8884 to talk with one of our Jumbo Loan Experts today. We’ll help you through the pre-approval process and answer any questions you have about Florida Jumbo Loans.