Waco Jumbo Home Loans

Due to the rapidly increasing home prices in recent years, many homebuyers found themselves ineligible for a conventional loan because the loan amount they need exceeds the Waco, TX loan limits. Like them, you may also need a jumbo loan to finance your home purchase, even if the home you wish to purchase is far from jumbo. 

What is a Jumbo Loan?

Jumbo loans are mortgages that cost more than the maximum allowable amount for conforming loans in the area. The Federal Housing Finance Agency (FHFA) has set a maximum conforming loan amount of $647,200 for 2022. This applies to the vast majority of counties across the country. If you want to buy a home that costs more than this, you will need a jumbo loan.

Jumbo loans are deemed riskier for lenders because they cannot be guaranteed by Fannie Mae and Freddie Mac, leaving the lender unprotected against default losses. That is why lenders impose exacting qualification criteria for jumbo loans to mitigate the risk. You’ll need near-perfect credit, above-average income, and a low debt-to-income ratio to qualify for one. 

Advantages of Getting a Jumbo Loan

Borrowers who qualify for a jumbo loan enjoy the following benefits:

• Higher loan amounts

The most significant advantage of jumbo loans is the access to a much more substantial loan amount, which can be the deciding factor in acquiring a high-quality residence. 

• Competitive interest rates

If you meet the high standards and pass the stringent qualification process for jumbo loans, you’ll have access to loan products with some of the lowest interest rates in the market.

• Loan flexibility

Jumbo loans don’t have to follow FHFA guidelines, which means lenders can give borrowers more freedom to choose what terms work best for them. With a jumbo loan, you can get a fixed-rate mortgage for 15–30 years or an adjustable-rate mortgage with fixed terms of 3–10 years. Other personalized options are also available.

Disadvantages of Jumbo Loans

Every loan has pros and cons, and jumbo loans are no different. Here are some downsides to jumbo loans that you need to be aware of: 

• Property vetting 

With a jumbo loan, you will have to check out the property to ensure it meets your lender’s jumbo loan requirements. This can be tricky and – quite frankly – stressful because lenders tend to have different rules and requirements.

• Higher credit score needed 

People with credit scores of 680 or lower will have trouble getting a jumbo loan. If you want a jumbo loan, you’ll have to work on improving your credit score or put in a larger down payment.

• Above average income

Lenders are very cautious in granting jumbo loans. They want proof of a consistent annual income and personal finances to ensure payment.

• Cash reserve requirement 

Borrowers may be required to provide (lock up) an additional twelve months of cash reserves at the closing to receive their loan. This protects the lender if the borrower experiences financial difficulties and defaults on the loan.

Your Jumbo Dreams Within Reach

If you live in an expensive area or found your dream home, but it’s a little too expensive for Freddie Mac or Fannie Mae, your only option may be a jumbo loan. 

Capital Home Mortgage offers jumbo loans with great interest rates, and we’ll be more than happy to provide you with the jumbo financing you need to buy your dream home or investment property!

What are you waiting for? Call (254) 213-7343 to qualify for a jumbo loan today!