While shopping for a home, one of the types of loans you may be considering is a jumbo loan. This type of mortgage lets you borrow more than the Fannie Mae and Freddie Mac limits permit for conforming mortgages.
There are a lot of things that you might have heard about jumbo loans that are not necessarily true, and a lot of things you might believe that could be false. Let’s go over some jumbo loan myths to be aware of before you decide what type of loan to use when buying a home in Florida.
Things You Should Know About Jumbo Loans
- You cannot get a jumbo loan as a first-time homebuyer. Some people think that only if you are a repeat homebuyer will a lender consider giving you a jumbo mortgage. But this is not the case. Even if you are buying your first home, you can apply for a jumbo loan. And you may be successful depending on your credentials. What might hold you back is if you do not have a high credit score or there are other gaps in your borrower profile. But that would be true if you were a repeat homebuyer as well. And if you are a first-time homebuyer with a solid borrower profile, you may qualify for a competitive jumbo mortgage.
- You will pay a higher interest rate on a jumbo loan. Do interest rates for jumbo loans tend to be higher than they are for conforming mortgages? That is a common scenario, yes. You are borrowing more money with a jumbo loan, so lenders like to offset the higher risk. But it does not mean that higher interest rates for jumbo mortgages are universal. In fact, they are sometimes comparable to interest rates for conforming loans. To qualify for these competitive rates, however, you need to have a strong risk profile with respect to credit score, assets, DTI ratio, etc.
- You will have to put 30% or more down on a home. Something else that people say often about jumbo loans is that they require high down payments. As with the interest rates, it is true that on average, the down payment requirements are indeed higher than they are for conforming loans. But once again, this is not universal. You do not necessarily have to put 30% or more down when you buy a home with a jumbo mortgage if you have a high credit score and low DTI ratio. But also keep in mind that your interest rate is modified by your down payment amount. So, by putting down less, you may raise your rate. By putting down more—even if you do not have to—you can lower your interest rate.
- You do not need a jumbo loan if you are not buying a mansion. One more myth about jumbo mortgages concerns their use. A lot of homebuyers picture mansions when they hear about jumbo loans. If you are planning to buy a more modest home, you may think you would have no need for a jumbo mortgage. But it is not uncommon for regular homes to require more financing to buy than you can obtain through the use of a conforming mortgage. So, you might find yourself applying for a jumbo loan to buy your dream home in Miami or elsewhere in Florida.
Lending Bankers Mortgage Can Answer Your Jumbo Loan Questions
You now know a bit more about jumbo mortgages. Despite the common belief that they are only used to buy mansions, they can help facilitate the purchase of many other more modest properties. And while they can have higher down payment requirements and interest rates, there are opportunities to qualify for a jumbo loan with interest rates and down payment requirements similar to those of conforming loans.
Through our wide network of lenders in Florida, we can connect you with those opportunities and give you personalized recommendations to help you qualify for a competitive jumbo loan. We also can talk to you about conforming loans as well as government-backed options like FHA and VA loans.
To get started today, please give us a call at (786) 220-1100. We look forward to helping you find the ideal loan for your needs.