What is a Jumbo Loan?
What is the Difference Between a Jumbo and Conforming Mortgage?
The primary distinction between a jumbo loan and a conforming loan lies in the size of the loan. Because jumbo loans are larger, they inherently carry more risk for mortgage companies, often resulting in stricter approval criteria for borrowers. Unlike conforming loans, jumbo loans typically do not require private mortgage insurance regardless of the down payment size.
How Can You Qualify for a Jumbo Loan?
Typically, to be eligible for a jumbo loan with Florida Home Loans, borrowers must meet certain criteria.
First, a lower debt-to-income ratio is required due to the higher risk associated with jumbo loans. This helps the lender assess your ability to repay the loan, considering that monthly mortgage payments may be larger compared to conforming loans.
Second, a higher down payment is common to mitigate the lender’s risk. By investing more in the property, borrowers are less likely to default on the loan. Lenders also prefer a higher credit score, indicating a history of timely and full repayment of monthly debts. Moreover,
Lenders often require borrowers to have higher reserves and assets as part of their financial profile evaluation.
Finally, a second appraisal may be necessary to ensure the subject property’s actual value aligns with the anticipated loan-to-value.
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