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JUMBO loan - The Basics

What is a Jumbo Loan:

Jumbo loans let you borrow more than the conventional loan limit for your area -- $484,350, or $726,525 for high-cost areas -- in order to purchase a home that’s priced above average. Although Jumbo loans let you finance more, they have stricter requirements as a means of risk management for the lender.


Programs:


Alternatives:

  • Buy in cash.

  • Veterans and other eligible borrowers can obtain VA loans beyond conventional limits unless the borrower is doing a 0% down mortgage. When a down payment is provided, VA loans do not have a set limit. (Positive changes coming in early 2020 for VA loans.)

  • Conventional High Balance loan limit for single-family is $726,525 and for a 2 family $930,300. Maximum DTI is 43% and 2 years tax returns required.

Good options are limited when it comes to mortgage loans on high-priced homes, which is a blessing in disguise. Jumbo loan guidelines prevent borrowers from purchasing more house than they can afford.


Other Notes:

The Tax Cuts and Jobs Act of 2017 decreased the amount of debt from which mortgage interest could be deducted, from $1million to $750,000 (the House bill had it reduced to $500,000). Given that personal deductions were increased and that borrowers considering Jumbo loans have a good-sized savings, this shouldn’t weigh too heavily on the mind of the borrower.





Disclaimer:

Rates, regulations, and loan conditions can and do change. The information presented in this article was accurate, to the writer’s knowledge, as of 11/20/2019.Consult your Sovereign Mortgage Investments Inc. advisor to see if rates, regulations, and loan conditions have changed.


Douglas Kennell

NMLS #364758

Sovereign Mortgage Investments, Inc.

NMLS #222681

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doug@financebydoug.com

(239) 542-6224

Cape Coral, FL 33904