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Purchasing a More Expensive Home With a Jumbo Loan

Purchasing a More Expensive Home With a Jumbo Loan

Are you interested in buying a luxury home that is in a higher price range? Housing prices have increased steadily around the United States since the pandemic, and perhaps you may need to use a jumbo loan to help purchase your ideal home. A jumbo loan is designed to finance a property that is considered too expensive for a traditional conforming loan. If you are interested in a home with a higher price tag in San Luis Obispo, California, Mike Poyntz – Motif Mortgage can help. Read on to learn more about financing a home with a jumbo loan.
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Jumbo Loan: Basic Information

todd-kent-178j8tJrNlc-unsplashJumbo loans are a type of non-conforming loan, meaning that they are too expensive to be classified as a traditional conforming loan. Government-sponsored entities (GSEs) like Freddie Mac and Fannie Mae buy conforming conventional loans from lenders and then sell them to investors. These GSEs set a maximum loan limit, (which is currently $647,200), and if a loan amount exceeds that limit, it is then considered a non-conforming jumbo loan. Jumbo loans are risky for lenders because they are not backed by GSEs, and a lender is not protected from financial losses if a borrower is unable to pay back the loan. If you want to buy a luxury home, or one that is significantly more expensive than other homes in your area, a jumbo loan could be a good financing option for you. Although interest rates on jumbo loans are high, you may even be able to refinance a jumbo loan after a certain period of time for a better rate. Borrowers are most likely to be eligible for a jumbo loan if they have a high credit score, ample financial resources, and are able to put down a higher down payment.

Jumbo Loan Eligibility Requirements

The underwriting criteria for jumbo loans is very strict for borrowers since jumbo loans do pose more risk to a lender. Some common eligibility requirements for jumbo loans include:

  • A minimum down payment amount of 20%
  • A low debt-to-income ratio, (DTI). Typically a DTI of 36% or lower is required.
  • A credit score of 720 or higher
  • You must provide verification that you have the financial resources to afford the cost of higher interest rates and closing costs
  • In order to safeguard against missing payments, you may be required to provide proof of liquid assets and savings
  • You may need to pay for more than one home appraisal in order to determine the value of a home

Get Help With A Jumbo Loan For Your Home Purchase

Mike Poyntz – Motif Mortgage can help you understand your loan options if you are looking to buy a luxury home, investment property, or a vacation home in San Luis Obispo, California. Contact our office today for a consultation.
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NMLS #1246224

Equal Housing Lender


Mike Poyntz - Motif Mortgage

San Luis Obispo Office:
735 Tank Farm Rd
Suite 210
San Luis Obispo, CA 93401

Paso Robles Office:
725 Creston Rd
Suite A
Paso Robles, CA 93446