Jumbo Loans Explained: What to Know About Financing High-Value Homes
For homebuyers looking to purchase a luxury property or a home in a high-cost area, a jumbo loan can provide the financing needed to make it happen. Unlike conventional loans, which have loan limits set by Fannie Mae and Freddie Mac, jumbo loans exceed these limits, allowing buyers to secure funding for homes with higher price tags. With flexible terms and competitive rates, jumbo loans make it possible to invest in a dream home while maintaining financial stability.
One key factor in qualifying for a jumbo loan is the down payment requirement. While many conventional loans allow for smaller down payments, jumbo loans typically require at least 10% to 20% down, depending on the investor and borrower qualifications. Additionally, lenders take a closer look at credit scores, debt-to-income (DTI) ratios, and financial reserves to ensure that borrowers have the ability to manage a larger loan. A strong credit score—often 700 or higher—can help secure more favorable terms and interest rates.
Investors also require buyers to demonstrate financial stability through documentation such as tax returns, bank statements, and proof of reserves. Reserves—often equal to 6 to 12 months of mortgage payments—help reassure investors that borrowers have the funds necessary to handle unexpected expenses. Additionally, since jumbo loans are not government-backed, investors may have varying qualification guidelines, making it important to work with a knowledgeable mortgage professional who can guide you through the process.
If you’re considering purchasing a high-value home and need financing beyond conventional loan limits, a jumbo loan could be the perfect solution. Contact your Ellason Mortgage Group loan originator today to explore your options and find the best loan to fit your financial goals!