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Everything You Need To Know About Jumbo Home Loan

Everything You Need To Know About Jumbo Home Loan

Are you planning to purchase a luxurious house but failing to find a mortgage covering the costs? Then, a jumbo home loan is what you need at the moment. 

For those who are unaware, as the name implies, a jumbo loan is a type of loan that covers more than the normal loan amount and can be used for investment properties, primary homes, and vacation homes. Many lenders offer jumbo loans for up to $3 million to $ 5 million and might be able to offer even higher loans. However, the maximum size of the loan can greatly vary depending on the location and lender. 

If you are planning to get a jumbo loan but don’t know the exact qualifying guidelines and Jumbo home loan rates, here is the complete information that will help you get a jumbo loan. 

How do I qualify for a jumbo home loan?

As the jumbo loan lenders take higher risk, the borrowers are required to show good financial health. Before approving the loan, the lenders will ensure it will get repaid even in financial hardship. The primary requirements for jumbo loans include the following:

a) Debt-income ratio

The lenders might look at your DTI ratio. Your DTI ratio is the comparison of your gross monthly income to outstanding debts. So, if your debt percentage is higher than your monthly income, the lenders may worry about the mortgage repayment. However, things might work out when your credit score is not that high, but your DTI is low, and when you have high DTI but have high cash reserves or a high credit score. 

b) High credit score 

You may require a higher credit score than you need to qualify for a conventional loan. Lenders use this score to determine whether you can be financially reliable. In short, a high score helps to demonstrate financial responsibility. 

c) Cash reserves

Lastly, lenders may look at the amount of cash reserves you have in the bank. Depending on your loan amount, they may even ask for proof that you can make payments for your mortgage using only cash reserves for a specific time period. For the safer side, you should demonstrate that you can cover payment for at least 6-12 months using cash reserves. However, you must remember if your loan is approved, you still pay closing costs and a down payment.

How to get the best mortgage rate for your jumbo loan?

If you wish to get the best Jumbo home loan rates, you must ensure that your credit score is excellent; it’s crucial for getting the best rates. And like any other home loan, it is best to shop around to find the best lender to offer you the best rate. If you offer a larger down payment above the standard 20 percent, it might help you qualify for a lower rate. 

Contact experts for assistance to get the best jumbo home loan rates!

If you ever plan on purchasing a home in a high-price market, then a jumbo home loan is what you need. If you need help understanding the loan qualifications, documentation requirements, and tips to get the best Jumbo home loan rates, consider scheduling an appointment with Khan Home Loan. Their experts will navigate you through the complete procedure and help you achieve your dream of owning a luxury home. 

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