Best Jumbo Mortgage Lenders of 2018
What is a Jumbo Mortgage?
A jumbo mortgage is exactly what is sounds like: A huge loan to buy a house. But “jumbo” is not just in the eye of the beholder; rather, a loan is considered jumbo if it reaches specific amounts delineated by the Federal Housing Finance Agency, amounts that are subject to change each year. As of 2018, the jumbo loan threshold in most of the United States is $453,100, though in high cost areas it can go as high as $679,650.
|Most of the United States||$453,100|
|Washington D.C., certain parts of California and Tri-State area||$679,650|
The Top 5 Lenders for Jumbo Mortgages At a Glance
|Various, based on loan provider||Various, based on loan provider||Visit Site|
|From 3.75% APR on 15-year loans||15, 20, 30 years||Visit Site|
|From 4.086% APR||15- or 30-year fixed, 5- or 7-year variable||Visit Site|
|Based on personal financial information||15- or 30-year fixed, 5- or 7-year variable||Visit Site|
|Varies with each loan||Between 10 and 30 years||Visit Site|
Is a Jumbo Mortgage Loan Right For You?
If your dream house has a high price tag, you’re probably already considering taking out a jumbo mortgage loan. However, taking out a jumbo loan is easier said than done.
As a borrower, you need to figure out if you not only meet the requirements for a jumbo mortgage loan, but whether you will continue to meet them. Do you have a stable job with a large enough income that you’ll be able to make the significant down payment and then regular monthly payments for up to 30 years? And is the house in question worth it?
While a bank or private lending institution can tell you if you fit the requirements for taking out a jumbo loan, only you can answer as to the impact it will have on your financial and personal life.
How to Qualify for a Jumbo Mortgage?
The exact requirements of a jumbo loan will be underwritten by each individual lender, as opposed to conforming loans like Fannie Mae and Freddie Mac, which are underwritten by the Federal Housing Finance Agency. Lenders have the freedom to underwrite their own jumbo loans because when dealing with such large amounts, they need to take extra precautions to make sure they get paid back.
Because you’re dealing with amounts above the conforming loan limits, you need to fulfill very strict requirements:
- Usually 2 appraisals instead of 1
- Higher down payment (15%, 20%, 30%, depending on lender)
- Credit score of 700 or higher
- A debt-to-income ratio of 43% or less
- 6-12 months reserves in your bank account
- Proof of income: Dig back for at least 2 years’ worth of tax documentation, liquid assets, and similar paperwork to prove that you’re earning enough to cover your monthly payments
The Pros and Cons to Consider
|Ability to purchase an expensive home||Difficult approval process|
|Similar interest rate as conforming loans||Large repayment amount|
|Many lenders don't require purchase of PMI with a down payment of less than 20%|
The Top 5 Lenders for Jumbo Mortgage Loans
Minumim credit score: 700+
Minimum down payment: 20% for lowest rates
When you use LendingTree you can input your personal information and let the website find the best jumbo loans out there. There are no hidden fees for using this service, and LendingTree has a network of 350 reputed lenders, creditors, and banks with a wide array of terms. You can take out a jumbo purchase or refinance loan, and because jumbo rates vary between lenders by as much as .5%, LendingTree's comparison is an excellent way to get the best rates.
Best for: 'Super' jumbo mortgages ranging from $650,000 to millions of dollars
Biggest perk: Get 5 offers in 5 minutes or less
Minimum credit score: 620+
Minimum down payment: 10%
The Better Mortgage site is super-easy to use; when you input basic info (where the house is located, how much it costs, and how much your down payment and the amount you're looking to pay for your jumbo loan would be), the site immediately finds relevant loans with the best possible rates. It also tells you how much you can expect to pay in third party fees. If you input your information and no loans are available, the site will make suggestions about what you can change to receive loan options.
Best for: Low closing costs on your jumbo mortgage
Biggest perk: Easy to use jumbo loan comparison
Minimum credit score: 700+
Minimum down payment: 15%
Quicken Loans offers a large range of home purchase loans and is known for allowing people to compare loan options at a glance. Qualifying customers can borrow up to $3 million, making it a suitable choice for a fixed- or adjustable-rate jumbo mortgage loan. Quicken advertises jumbo rates that are even lower than conventional mortgage rates, offering you more flexibility in your budget and less interest long-term.
Best for: Jumbo rates that are even lower than conventional rates
Biggest perk: Quick turnaround on jumbo loans
Minimum credit score: 700+
Minimum down payment: 15%
With varying rates and terms, Rocket Mortgage is a good option for borrowers in many different financial situations. Jumbo loans taken out through Rocket Mortgage, a subsidiary of Quicken, are done exclusively online, so it’s best for people who feel comfortable using technology. However, as an online service, the support staff works nearly around the clock and is knowledgeable and thorough.
Best for: Buyers in a hurry, with quick turnaround times for jumbo funding
Biggest perk: Jumbo loans entirely online
Minimum credit score: 700+
Minimum down payment: 20%
CrossCountry specializes in home purchase loans, and specifically, fixed rate and adjustable rate jumbo loans. One of the perks of going with CrossCountry is that you get a dedicated loan officer to help you through the loan process. CrossCountry boasts excellent customer service for both purchase and refinance jumbo loans.
Best for: Jumbo loans up to $3 million
Biggest perk: Designated loan officer for each jumbo loan
Jumbo Loan vs Conventional Loan
While conventional or conforming loans like Fannie Mae or Freddie Mac follow guidelines specified by the the Federal Housing Finance Agency, the requirements for jumbo loans are set by each individual lending institution since it is taking on more risk. Because the loan amount is higher, the requirements are stricter and it’s not as easy to get approved. Lenders will want to see the following:
- Proof of income:
Lenders will want to see that you have enough liquid assets on hand to cover six months worth of mortgage payments or more, as well as two years worth of tax documents proving that you have a stable source of income.
- Good credit history:
Lenders will only supply jumbo loans to borrowers with credit scores of at least 620, however it can be difficult to qualify for a loan with good terms if your credit score falls below 700.
- Debt-to-income-ratio (DTI):
Conventional mortgage lenders typically require 43% or less DTI in order to qualify for a loan. Jumbo mortgages often require a lower DTI because of the size of the loan.
- Down payments:
Traditionally, jumbo mortgages required higher than standard down payments, 30% or more. The ratio has shifted slightly, with some jumbo mortgages requiring down payments as low as 10-15%.
Every lender has it's own unique criteria for jumbo loans, so every program is different. Find a lender that fits your financial situation and qualifications.
Your Jumbo Mortgage Payments Include:
- Interest rates: The interest rates of a jumbo loan versus a conforming loan are fairly similar; in some cases, they can be slightly higher, but in others, they can be slightly lower. As with any loan, the interest rate on your jumbo loan will depend on many factors:
- Size of your down payment
- Credit score
- How much money you have in the bank
- Closing costs: In addition to the price of the house you want to buy, there are additional costs, that can include origination, appraisal, application fees, and anything else included in buying a property. Because jumbo loans involve significantly more paperwork than typical loans, the closing costs tend to add 2%-5% of the loan onto your total cost.
- Private Mortgage Insurance (PMI): When you take out a conforming loan, you’re required to purchase PMI if your down payment is less than 20%. However, when you take out a jumbo loan and you put down less than 20%, you will not necessarily need to purchase PMI, which can significantly cut down on your monthly payment amount
Taking out a jumbo mortgage loan to purchase a house is a good option for people with money in the bank, steady, large incomes, and good credit. Because jumbo loans are so big, you’ll find that each lender has its own qualifying requirements, as opposed to conforming loans, which follow guidelines set down by the Federal Housing Finance Agency. While qualifying for a jumbo loan involves a lot of paperwork and is not necessarily easy, if you do qualify, it’s a great way to finance the house of your dreams