What Is a Jumbo Loan?
A jumbo loan is a type of mortgage home buyers use for large purchases. Traditional mortgages, also called conforming loans, follow limits that the Federal Housing Finance Agency (FHFA) sets. A Jumbo Loans Texas which is also called a non-conforming loan is the kind of loan you’ll need if you require more than 7,200 to purchase your new single-unit house. Lenders will typically offer up to million as a jumbo loan. Fannie Mae and Freddie Mac cannot purchase anything that falls outside the FHFA limit, which makes these loans riskier investments for lenders to take on. Jumbo Loans Texas interest rates are typically higher, too.
Jumbo Loan Qualification Requirements
Because Jumbo Loans Texas aren’t subject to FHFA rules, lenders can set their own criteria for offering jumbo loans. No matter where you look for your Jumbo Loans Texas, you will need to be in good financial health to qualify. Here are some of the major requirements:
Credit Score: We ask for a FICO credit score of 700 or higher if you want to qualify for a Jumbo Loans Texas. Some lenders ask for higher scores depending on the size of the loan and may want a score above 720 or 740 if you’re borrowing more than million.
Debt-to-Income Ratio: In Texas, your debt-to-income ratio cannot be higher than 45%, although you may find that some lenders have a lower maximum for that number. A better debt-to-income ratio can help you get better Jumbo Loans Texas.
Cash Reserves: We require that you have cash reserves worth at least six months of mortgage payments. Cash reserves refer to liquid assets or readily available funds that individuals, businesses, or financial institutions set aside to cover unexpected expenses, emergencies, or to seize investment opportunities.
Down Payment: The down payment for a jumbo loan is typically between 10% and 30% of the total cost. Most lenders will ask for a down payment of at least 10%, though some require a higher down payment for larger loans.
Property Appraisal: If you’re applying for a loan that exceeds million, you may have to get a second appraisal on the house you want to buy. If your loan will exceed million, you will need two separate appraisals.
Closing Costs: The Jumbo Loan Texas are often much higher than those of a conforming loan. For this reason, many lenders will ask for proof that you can pay the closing costs and the first six months of your mortgage.
Financial Documents
Like with any mortgage, you’ll need to provide your lender with financial documents when applying for a jumbo loan. Lenders usually ask for your tax returns for the past two years, the past month’s pay stubs, bank statements for the past two months, and proof of other income, like investments. If you’re self-employed or own a business, you’ll need to provide profit-and-loss statements.
Property Type Requirements
You can buy investment properties, homes on land up to 40 acres, vacation homes, and multi-unit dwellings with Jumbo Loans Texas, though the requirements may be stricter for these types of properties than they are for a primary, single-family residence. For example, if you’re buying an investment property, we ask for either a 40% down payment or proof of equity for a loan as high as million. If the property you’re purchasing has more than 20 acres, you’ll need an additional 10% for your down payment. Keep in mind that the ceiling for conforming loans goes up for multi-unit properties. The 2022 limit in Jumbo Loans Texas for a two-dwelling home is 8,700, and for a three-dwelling home, the limit is ,001,650.
Jumbo Loan Refinancing Requirements
You can use a Jumbo Loans Texas to refinance. You have two options for refinancing in this manner: rate or term refinance or cash-out refinance. Remember that refinancing always comes with closing costs and that the other jumbo loan requirements also apply.
Rate or Term Refinance Requirements
To refinance with a Jumbo Loans Texas for a better interest rate or different loan term, you need to have equity built up in your home. The amount of equity required changes with the amount you want to borrow. For a loan up to .5 million, most lenders require 20% equity. For a loan between .5 million and million, we require 40% equity.
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