Federal Housing Financing has set these limits for Jumbo and conforming and Jumbo always exceed the conforming loan limits for each county. If you are planning to buy your next home over the conforming limits, then jumbo loan more likely is a great option.
There are few lenders that you can avoid private mortgage insurance as long as your loan to value (LTV) is under 89.9% you could save from paying mortgage insurance (MI) for multiple years. Unlike conforming which you can go up to 50% debt to income (DTI) Jumbo usually has a lower limit of 43%.
Majority of the lenders will require 3,6,9,12,18 or even up to 24 months of reserve. Good thing is lenders will accepts your reserve from multiple sources even your 401K and your assets in bank account such as checking or savings accounts. The most common reserve asset used are 401K as it is the easiest to document and many case has enough assets.
Reserve dollar amount are determined by the size of the loan, numbers of units, your FICO score and your lenders may have additional overlays based on other factors.
Jumbo in many cases required second appraisal, considering the size of the loan, and may be challenging to find a comparison. This is specially challenging if you are purchasing a home one of kind and Appraiser is challenged to find comparable.
Why Jumbo Loan?
Best part of jumbo loan is that you can borrow above Fannie Mae and Freddie Mac loan limits, please check your county loan limits, and as always check guidelines as they do change.