The maximum value of a single mortgage that Fannie Mae or Freddie Mac will purchase from lenders is typically $417,000 for a single family residence, but can reach as high as $625,500 in higher-cost areas. Loans eligible for purchase by these two entities are known as conforming loans. For those in need of a loan greater than these amounts, non-conforming options such as the Jumbo loan are available. A jumbo loan is a mortgage loan with a value that exceeds the conforming loan limits. At Peoples Home Equity we are able to offer jumbo loans throughout San Diego on a variety of property types.
Vacation homes, primary residences, and various investment properties can all be purchased using a jumbo loan. Since they are not eligible for purchase by Freddie Mae or Fannie Mac, Jumbo loans are generally considered a bit riskier than conforming loans. This means that lending criteria and credit requirements can be more stringent. Jumbo loans may also come with a slightly higher interest rate. Some of the more common requirements that must be met for a borrower to qualify for a jumbo loan can be found below. One thing to note is that lenders can always set their own jumbo loan criteria as the loans do not need to adhere to the same Fannie Mae and Freddie Mac guidelines that conforming loans do.
San Diego Jumbo Loan Requirements
Credit Score – A credit score of roughly 700 is going to be required for a jumbo loan. A borrower’s unique financial situation may offer flexibility in this area.
Down payment – Lenders have historically required a down payment of at least 20 percent for a jumbo loan. Lower down payments in the range of 10 percent may be available for some. Your income and assets will need to support the lowered down payment requirement and in some instances, private mortgage insurance may be required.
Debt-to-Income Ratio and Income – A debt-to-income ratio of 43 percent or less is commonly required. Documentation such as W2 forms and recent paystubs will be required to verify income as you will need to be able to prove that you have the income and reserves necessary to cover your mortgage payments.
Property Appraisal – The purchase price and the mortgage being applied for will need to be supported by the property being purchased.
You should be prepared to provide documentation that outlines proof of income, liquid assets, non-liquid assets, and any other loans that you may hold regardless of the size of the jumbo loan you need. This documentation will show your lender that you have the ability to repay the loan you are applying for. Missing documentation can delay the approval process so you should be prepared to provide this information.
Jumbo loans can be a great choice for borrowers looking to purchase a more expensive home, investment property, or even a second home in San Diego. At Peoples Home Equity, we offer great rates and flexible payment options on jumbo loans for many property types. Contact us today for more information on San Diego jumbo loans or to begin the pre-qualification process.