Jumbo Home Loans in Federal Way Washington 

In Federal Way, Washington, jumbo home loans cater to borrowers seeking larger loan amounts that exceed the conforming loan limits set by Fannie Mae and Freddie Mac.  Jumbo loans are commonly used to finance higher-priced properties.  Jumbo loans often require a higher credit score and a more significant down payment than conforming loans, and underwriting conditions may be more stringent. Additionally, jumbo loan interest rates may be higher than conforming loan rates. In Federal Way Washington State, these loans are typically utilized to acquire more expensive properties, such as luxury residences.

Qualification Requirements of a Jumbo Loan in Federal Way

The three prerequisites for jumbo loans are a high credit score, a low debt-to-income (DTI) ratio, and adequate cash reserves.

• Credit Score

A higher credit score is required to qualify for a jumbo loan than a conventional one. Lenders use your credit score to determine your financial reliability. A good score facilitates the demonstration of fiscal responsibility.

Depending on the lender, jumbo loans require a credit score of at least 720, while some offer jumbo loans to borrowers with a credit score of at least 700 and a more significant down payment requirement.

• Debt-to-Income Ratio

In addition to reviewing your credit report, lenders will also consider your debt-to-income ratio (DTI). Your DTI is the ratio between your gross monthly income and total monthly debts. If your debt-to-income ratio is high, lenders may be concerned that you won’t be able to make your mortgage payments in times of financial difficulty.

In most cases, the maximum debt-to-income ratio (DTI) for jumbo loans is 43 percent. Lenders prefer a lower debt-to-income ratio without compensating factors.

• Reserves

A cash reserve (also known as a mortgage reserve) is the “rainy day” reserve you’ve set aside for emergencies like job loss. 

You should demonstrate that your savings can cover at least six to twelve months of mortgage payments. Remember that you will still need to pay the down payment and closing charges if your loan is accepted. You must demonstrate that your cash reserves can meet the closing expenses and mortgage payments for at least six to twelve months.

• Downpayment Requirement of a Jumbo Loan

As a general rule of thumb, you can anticipate making a down payment of at least 10% for a jumbo loan. While a 20% down payment is reasonable, certain lenders may ask for a 25% or even 30% minimum down payment. In the end, your credit score and debt-to-income ratio may determine the amount of the down payment required to qualify for a jumbo loan.

Apply For A Jumbo Home Loan in Federal Way Washington

Capital Home Mortgage Federal Way is committed to providing a one-of-a-kind home-buying experience. Contact our Federal Way Loan Officers at (253) 528-4417 to begin the application process for a Jumbo loan.