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Jumbo Mortgage Oveview

Jumbo Mortgage Oveview

    The size of your mortgage impacts many factors including your interest rate, borrower mortgage qualification guidelines and lender requirements.  Below, we outline the three mortgage size categories: conforming mortgage, conforming jumbo mortgage (also called a super conforming mortgage) and jumbo mortgage and review the loan limits that apply to each category.  We also review the key differences between jumbo and non-jumbo loans.  The better you understand how jumbo mortgages work the more likely you are to find the jumbo mortgage that is right for you.

  • Types of Mortgage Based on Loan Amount
  • As outlined below, mortgages fall into three categories depending on the size of the loan:

    • Conforming mortgage: In the 48 contiguous states, Washington D.C. and Puerto Rico, this is a mortgage with a loan amount of $424,100 or less.  In Alaska, Guam, Hawaii and the U.S. Virgin Islands this is a mortgage with a loan amount of $636,150 or less
    • Conforming jumbo mortgage: Also called a super conforming mortgage, this is a mortgage with a loan amount greater than $424,100 (or $636,150 in Alaska, Guam, Hawaii or the U.S. Virgin Islands) but less than the loan limit set by the government for high cost areas (counties with higher average home prices)
    • Jumbo mortgage: Also known as a non-conforming jumbo loan, a jumbo mortgage is a mortgage with a loan amount that exceeds the loan limit in a county 

    The table below outlines the conforming loan limits for general and high cost areas in the U.S. and selected territories.  A mortgage amount that is greater than the limits presented in the table is a jumbo mortgage.  Please note that conforming loan limits vary by county.

Conforming Loan Limits – Maximum Original Principal Balance
Number of Units Contiguous United States, District of Columbia,
and Puerto Rico
Alaska, Guam, Hawaii, and the U.S. Virgin Islands
  General High Cost General High Cost
1 $424,100 $636,150 $636,150 $954,225
2 $543,000 $814,500 $814,500 $1,221,750
3 $656,350 $984,525 $984,525 $1,476,775
4 $815,650 $1,223,475 $1,223,475 $1,835,200
  • Jumbo Mortgage Rates
  • The interest rate you pay on a jumbo mortgage depends on several factors including your credit score, loan-to-value (LTV) ratio, loan term and mortgage type.  Regardless of mortgage type -- fixed rate, adjustable rate mortgage or interest only -- a borrower should expect the interest rate for a jumbo mortgage to be .125% to .375% higher than the interest rate for a non-jumbo loan.  Historically this has been the case; however, since 2014 the interest rates for jumbo and conforming loans have been approximately the same for certain mortgage programs over certain periods of time.

    Borrowers also see more variation in interest rate pricing and terms for jumbo mortgages as lenders have more flexibility in setting pricing and borrower qualification guidelines for jumbo loans than they do for conforming mortgages.  This dynamic creates more competition between jumbo mortgage lenders.  Jumbo mortgages are provided by traditional lenders such as banks, mortgage banks, mortgage brokers and credit unions.  Borrowers can benefit from this competition by shopping multiple lenders to find the jumbo mortgage with the lowest interest rate and closing costs. Click on lenders in the table below or INTEREST RATES to compare jumbo mortgage interest rates.

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    Points  More Info:
    Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
     
    Total Lender Fees:  
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    Monthly Housing Payments
    P & I More Info
    Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance.
    Mortgage Insurance More Info
    Mortgage Insurance: The monthly cost for a policy that protects the lender in case you’re unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%.
    (Estimated)
    Property Tax More Info
    Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ...
    (Estimated)
    Homeowner Insurance More Info
    Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ...
    (Estimated)
    Homeowner Association Fee More Info
    Homeowner Association fee: (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs.
    (If Any)
    Total Monthly Housing Payments
    Lender Fees
    Points More Info
    Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
    Origination Fee More Info
    Origination Charge: A loan origination charge is a fee charged by the lender for evaluating, processing, and closing the loan.
    Credit Report Fee More Info
    Credit Report Fee: Fee charged to obtain an applicant’s credit history prepared by one or all of the three major credit bureaus. Used by lender to determine the borrower’s creditworthiness.
    Tax Service Fee More Info
    Tax Service Fee: A fee charged by the lender to cover the cost of retaining a tax service agency. These agencies monitor the property tax payments on the property and report the results to the lender.
    Processing Fee More Info
    Processing Fee: A processing fee is a charge by the lender for clerical items associated with the loan. Examples of processing include loan set up, organization of loan conditions for underwriting, and preparing required disclosures for the borrower.
    Underwriting Fee More Info
    Underwriting Fee: A fee charged by the lender to verify information on the loan application, authenticate the property’s value, and perform a risk analysis on the overall loan package.
    Wire Transfer Fee More Info
    Wire Transfer Fee: In most cases lenders wire funds to escrow companies to fund a loan. Commercial banks that perform this function will charge the lender so the fee is generally passed on to the borrower.
    (If Any)
    FHA Upfront Premium More Info
    FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception.
    (If any)
    VA funding Fee (If any)
    Flood Fee
    Other Fees More Info

    Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees)

    The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower’s attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services.

    Total Lender Fees
    *Actual rates and other information may vary. Sponsored results shown only include participating lenders. The information you enter on this page will only be shared with lenders you choose to contact, either by calling the phone number or requesting a quote.
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    Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Click here for more information on rates and product details.
  • Differences Between Jumbo and Non-Jumbo Mortgages
  • Loan-to-Value Ratio (LTV) Requirement for Jumbo Mortgages

    Historically lenders have typically imposed stricter limits on the maximum loan-to-value (LTV) ratio for jumbo mortgages.  The LTV ratio is the ratio of the mortgage amount to the value of the property you are financing.  In the past, for jumbo loans, lenders have typically required a maximum LTV ratio of 80% or even as low as 60% in some cases, depending on the loan amount, type of loan and mortgage program.  For example, a lender may have been willing to lend you $2 million but required a maximum LTV ratio of 60% in order to receive the lowest interest rate from the lender, so you were required to make a down payment of at least 40% of the property purchase price.

    Since 2014, however, some lenders have relaxed their guidelines for jumbo mortgages and now permit a maximum LTV ratio of 85% or 90% in some cases, although borrowers may pay a higher interest rate at higher LTV ratio levels. Please note the higher LTV ratio usually applies to jumbo purchase mortgages while lenders apply a lower LTV ratio to jumbo refinancings and an even lower LTV ratio for jumbo cash-out refinancings.

    By comparison, for conforming loans, lenders will typically offer you their lowest interest rate if the LTV ratio is 80% or lower and borrowers are able to obtain mortgages with an LTV ratio of 97% or even 100% in the case of the VA and USDA mortgage programs.

    Credit Score Requirement for Jumbo Mortgages

    Borrower credit score requirements for jumbo mortgages are usually higher than for conforming mortgages.  Lenders typically require that jumbo mortgage borrowers have a minimum credit score of 700- 720 to receive their best mortgage terms although some lenders may permit lower credit scores.  Lenders may apply lower LTV ratio and borrower debt-to-income ratio requirements for jumbo mortgage borrowers with lower credit scores which can make it more challenging to qualify for a loan.

    Borrower Reserve Requirements for Jumbo Mortgages

    Many jumbo lenders require that borrowers have six-to-nine months of total monthly housing expense (mortgage payment, property tax, homeowners insurance plus other applicable housing-related expenses) as savings in reserve when the mortgage closes.  The borrower reserve requirement varies by lender, loan amount, loan type and mortgage program.  Borrowers with lower credit scores may be required to have higher reserves.  Be sure to understand a lender's reserve requirement for a jumbo mortgage to ensure that you have sufficient funds to qualify for the mortgage.

    Mortgage Program Eligibility for Jumbo Mortgages

    There are other differences between jumbo and conforming mortgages that borrowers should be aware of.  Most government-backed low or no down payment mortgage programs such as the FHA and VA home loan programs only apply to mortgage amounts below the loan limit so jumbo mortgages are not eligible for these programs.  Most conventional low or no down payment mortgage programs such as Fannie Mae's HomeReady Mortgage Program and 3% Down Payment / 97% LTV mortgage program only apply to mortgage amounts below the conforming loan limit so jumbo mortgages are also not eligible for these programs.

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