If you are shopping for a loan which exceeds the limits set by Fannie Mae and Freddie Mac, you will need to apply for a jumbo mortgage. For reference, those limits are:
- One unit
- Two units
- Three units
- Four units
A jumbo loan may also sometimes be referred to as a “non-conforming” loan. You may be aware that it is more challenging to qualify for a jumbo loan than it is to qualify for conventional loan. Here’s what you need to know about jumbo loan eligibility.
1. You need a solid credit score.
Because a jumbo loan presents a higher risk to a lender than a conforming loan, you will need to demonstrate a higher level of stability and trustworthiness as a borrower. One of the key metrics which lenders look at to determine whether you meet their criteria is your credit score.
When applying for a jumbo mortgage, your credit score should be 680 or above. Occasionally, you may find a lender that is willing to accept a lower score, but you will usually get more competitive loan offers from brokers who set a higher minimum threshold.
2. You require a healthy debt-to-income ratio.
Ideally, your debt-to-income ratio should not exceed 45%. Try to get it lower if possible. The lower your debt is in proportion to your income, the more financially viable you appear to lenders.
While a good debt-to-income ratio is a requirement for any mortgage, the requirement tends to be more stringent for Florida jumbo loans than conventional loans.
3. You should have a fair amount of cash in reserve.
Anytime you apply for any type of mortgage, lenders are going to want to see that you have some extra money in the bank in case there is any disruption to the flow of your income.
Because of the higher amount of a jumbo mortgage, you will usually need to show higher cash reserves.
4. You need to be ready to pay on a jumbo loan.
While the lender will look mainly at the numbers which sum up your financial situation, you need to be thinking about your finances as well and whether this is the right time to be taking out a jumbo loan.
What about interest rates? Here there is some good news. While you might assume that interest rates on Florida Jumbo loans are higher than those for conventional loans, this is not a given.
Find Out Now if You Qualify for a Jumbo Loan in Florida
Now that you know a bit more about the requirements to qualify for Florida jumbo loans, you should have at least some idea of whether you are likely to be eligible. Still not sure? Please give Premier Lending Corp a call at 954-840-8811 to schedule a consultation. We can go over your finances with you and help you make a determination. If you are eligible, we can assist you with your application.