As a part of the Economic Stimulus Bill, jumbo mortgage limit has been extended especially in higher cost areas. And recently rates on jumbo loans have also dropped down. But in spite of this, borrowers aren’t able to make use of the rate cut or the extended limit. This is because even though rates have gone down, lenders have tightened their lending criteria. As such, getting a jumbo mortgage does not depend only upon the appraised home value and your credit score, but also on the condition of the housing market in your area.
There are 3 types of jumbo loans:
1. Jumbo-conforming loans: These loans (between $417,000 and $729, 750) and satisfy the Fannie Mae/Freddie Mac guidelines and are sold off to the secondary market.
2. FHA jumbo-conforming loans: Such loans meet the guidelines put forward by the FHA.
3. Bank jumbo loans: These loans do not conform to the FHA or any agency.
As I said before, lending criteria for these loans have tightened and as such you’d have to pay at least 20% down payment if you’d like to get a jumbo-conforming loan. The other criteria are:
• A credit score of 660 and above
• A housing market which isn’t on a decline.
The jumbo-conforming loan is however for those who’re willing to borrow somewhere between $417,000 and the local conforming limit in their states. However, if you need to borrow somewhere between $417,000 and the FHA limit for the local area, then you may consider taking out FHA jumbo loan. Other factors involved with FHA jumbo loans are:
• You need to pay mortgage insurance
• You are able to put down at least 3% of the purchase price
However, the FHA jumbo is still affordable if you have comparatively lower credit score (I mean less than 650) and your property is in a declining market. But I would suggest that you check out the affordability factors before you take out a larger loan in a declining market.
Unlike the first 2 categories, third category, that is, bank jumbo loan is a specialized product and as such it is available only from selected companies in the market.
[tags]jumbo mortgage criteria, jumbo conforming loan, fha jumbo loan[/tags]