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Jumbo Loans
A jumbo loan is a mortgage that surpasses the conforming standard loan
limits set by government-backed agencies like Fannie Mae and Freddie
Mac. These loans are different from other mortgages because they are
designed for pricier properties.
The conforming limit for most parts of the country in year 2024 is
$766,550. This means that in most parts of the country, if you need to
take out a mortgage for more than $766,550 in 2024, you'll need to apply
for a jumbo loan. Depending on where you are buying, though, the
conforming loan limits can be as much as $1,149,825.
Because of the higher loan amount, requirements tend to be stricter.
Most lenders will require a minimum credit score of 700 and a
debt-to-income (DTI) ratio lower than 45%. Also, lenders typically
require a 20% down payment for a single-family home and higher down
payments for multifamily units. Jumbo Loans are often subjected to
premiums on interest rates and other restrictions.
Table below shows the comparison between a
none-conforming jumbo and conforming loans differ:
|
Comparison Area |
Jumbo Loans |
Conforming Loans |
|
Loan Limits |
Set by individual lenders |
Up to $726,200 (varies by area) |
|
Interest Rates |
Usually higher |
Usually lower |
|
Down Payment |
Typically higher |
As low as 3% |
|
Credit Score |
Typically higher (>700) |
Typically lower (>620) |
|
Lender Requirements |
More stringent |
More flexible |
|
Loan Fees |
Often higher |
Usually lower |
|
Government Guarantee |
No |
Yes (Fannie Mae, Freddie Mac) |
|
Availability |
Fewer lenders offer them |
Widely available |
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