How Do You Qualify for a Jumbo Home Loan?

If the house of your dreams is in an expensive area, you may need a jumbo home loan to become the owner.

Federally-backed mortgage companies only guarantee loans that are under a certain amount, called the conforming loan limit. In 2020, the maximum in most parts of the United States is $510,400 – and if the northern Utah property you want to finance costs more than that, you can look into taking out a jumbo loan.

Mortgage lenders consider jumbo loans to be riskier than conventional loans, so they come with stricter eligibility requirements. Here, the Intercap Lending team offers a road map to qualifying for a high-value mortgage.

Utah jumbo home loans

Down Payment

The amount of money you’ll need for a down payment is typically much higher with a jumbo loan than with a conventional mortgage. Lenders typically require at least 20 percent of the purchase price of the home.

Credit Score

As you might expect, getting approved for a high-value mortgage requires a high credit score. If yours isn’t 700 or above, you may have trouble qualifying for a jumbo home loan.

Debt-to-Income Ratio

For a jumbo loan, your debt-to-income (DTI) ratio – a figure that compares how much debt you have to how much money you earn – needs to be low. Often, mortgage lenders require a DTI as low as 36 percent.

Income Documentation

Mortgage lenders will want to know that you have a regular, predictable income before offering a jumbo loan. To qualify, you may have to provide extensive documentation of your past earnings as proof of your financial stability.

Home Appraisal

Because of the large amount of money involved, the home appraisal for a jumbo loan often undergoes extra scrutiny. And depending upon the property you want to purchase, some mortgage lenders may require a second appraisal.

Cash Reserves

Having a good amount of cash in the bank may be necessary if you want a jumbo loan.  Mortgage lenders commonly require that borrowers have enough assets in reserve to cover at least a year’s worth of living expenses.

Closing Costs

Jumbo loans are larger than their conventional counterparts, and qualifying takes a few extra steps. As such, the amount of cash you’ll need at closing will be much higher if you take out a high-value mortgage.

Would you like to learn more about the qualification requirements for a jumbo home loan? If the property you want to finance is in northern Utah, turn to the experienced independent mortgage brokers at Intercap Lending.

With us, exploring your mortgage options is easy – and we’ll work hard to find you a favorable financing solution. For expert advice and guidance on qualifying for a Utah jumbo home loan, contact Intercap Lending in Orem, Utah, today.