1st Advantage Mortgage is a licensed mortgage broker and lender in Charlotte, NC. Charlotte files cross the conforming limit most often in Myers Park, SouthPark and around Lake Norman. As a broker, we compare jumbo pricing and reserve requirements across specialist wholesale lenders, so you can evaluate the full qualification picture before choosing a loan.
What Is a Jumbo Loan?
A Jumbo loan or Jumbo mortgage is a loan for an amount that’s higher than the Federal Housing Agency’s limits. These loans are not purchased or guaranteed by Fannie Mae or Freddie Mac, the two largest lending institutions in the U.S. Often, Jumbo loans are used to pay for luxury homes or those that are on larger lots. These loans are riskier for lenders and typically have more stringent requirements that homeowners need to meet.
Jumbo Home Loan Eligibility
A Jumbo mortgage limit typically refers to the threshold where conforming loans end and Jumbo loans begin. A conforming loan is the typical loan you’re familiar with, such as a Conventional loan or an FHA loan. However, these loans may not cover high-cost properties, which is when Jumbo loans become necessary.
Conventional financing is available up to $845,000 through our wholesale lenders. If your loan amount is under that, you may not need a jumbo loan at all, and conventional pricing and underwriting are usually easier. Above it, this page is for you. Borrow above the limit and you will likely need a Jumbo loan. However, in areas with a high cost of living the threshold for Jumbo loans is higher.
However, Jumbo loan limits may be different in different parts of the country. If you were to buy a home in California, you would likely pay much more for that home than one of the same size and with the same features in Iowa. That’s why Jumbo loan rates and limits vary based on where the property is located. It is important to learn what the Jumbo mortgage limit is in your area.
Jumbo Home Loan Rates
Jumbo home loans are a higher risk for lenders. As a result, Jumbo loan interest rates tend to be higher than those for conforming loans. They also have much stricter qualifications for buyers. The exact Jumbo loan rate you pay is always very specific to your credit qualifications and other risk factors the lender has to take into consideration.
Benefits & Disadvantages of a Jumbo Loan
The benefit of securing a Jumbo loan mortgage is as simple as being able to purchase and finance a home that’s worth more. For borrowers who want to purchase that home on the waterfront or a larger estate, these loans become the only route to doing so unless you make a large down payment.
There are drawbacks to Jumbo loan mortgages, though. They tend to be harder to obtain, requiring a larger amount of income. You also need to show proof of income, credit score, and have a larger down payment to purchase them.
Jumbo or Conventional Loan? Which Is Better?
As you consider Jumbo home loans options, compare them to the availability of traditional loans called conforming loans. The most common type of conforming loan is the Conventional loan, which is also the type of loan that’s most often compared to Jumbo loans.
The biggest difference between Jumbo loans and conventional loans is the size of the loan. When you hope to buy a home that’s worth more and you plan to finance a large portion of that purchase, you’ll need a larger loan.
It’s also important to consider the difference between Jumbo loan rates and conventional loan rates. Interest rates are potentially higher with Jumbo loans because the lender is taking on more risk. However, rates are very competitive across most lenders. If you have a good credit score and the income to make payments, they are likely to offer a competitive rate.
You’ll also likely need a larger Jumbo loan down payment. Down payments on conventional loans may range from 5% up to 20%. In some Jumbo loans, lenders will not accept less than 20%. This differs by lender and loan program.
Jumbo Home Loan Requirements For Home Buyers
In order to finance a large home purchase, you will need to meet Jumbo mortgage requirements. Like with most loans, you need to show the lender you can make payments in full and on time if they lend to you. Most lenders have stricter qualifications for underwriting these loans. Some of them may include.
- Credit scores of 660 or more, sometimes 720 or higher
- Debt-to-income ratios that are stricter, sometimes of 45%
- Cash reserves on hand to show you have liquid assets
- Documentation of your income
- Appraisals of the property to prove its worth
Not sure if you qualify? Contact us today to talk with one of our friendly Mortgage Experts.
Jumbo loan mortgage lenders in NC and SC set their own credit qualifications, and most will tell you upfront what you need to meet to qualify for these higher risk loans. Jumbo loan requirements are not always hard to reach, though. If you want to buy a high-valued home, it’s worth learning more.
At 1st Advantage Mortgage, our Mortgage Experts can quickly review your situation and the home you plan to purchase to give you an idea of what you may qualify for. Contact us for more information.
How to Apply for a Jumbo Loan
To obtain a Jumbo loan, you’ll need to go through the same application process as you would for a conventional loan. Your lender will determine if you qualify based on the information submitted.
You’ll complete a formal application that also includes proof of your identification. Then, the underwriters will review this information and decide whether or not to lend to you. Ready to get started?
Documents & Paperwork to Submit
- Proof of Income: This includes pay stubs, two years of federal tax returns, W-2 statements, and other documentation proving income.
- Asset Verification: In addition to this, lenders need to see proof of assets you own, such as investment accounts and bank statements to prove down payments and cash reserves.
- Employment Verification: Many lenders want to ensure you are working.
- Identification: You will need to show proof of your identity, such as your driver's license
All of this information is verified as accurate to ensure only those who should apply can do so.
Apply For A Jumbo Home Loan With 1st Advantage Mortgage Today
If you’d like to discuss your options further or have any questions about our lending services, to speak with one of our friendly Mortgage Experts.
Ready to get started? Great! Click “Apply now” below to begin your application.
Jumbo Loan FAQs
Reserves and guidelines, the part that decides a jumbo file
Jumbo guidelines vary more between lenders than on any other program, which is why the same borrower gets very different answers from different institutions. The areas where they differ most:
- Reserves after closing, counted in months of the full payment, and whether retirement accounts count toward them
- Maximum loan-to-value, and whether a second home or investment property is allowed at all
- How self-employed income is documented, and whether a bank statement jumbo exists on that lender's sheet
- Debt-to-income ceilings, and what compensating factors move them
- Appraisal requirements, including whether a second appraisal is needed above a threshold
Jumbo loans typically require a credit score of 680 to 700 or higher, along with cash reserves after closing. We compare jumbo pricing and reserve requirements across our wholesale lenders before recommending where the file goes.
Where Charlotte files cross the conforming limit
Most often in Myers Park, Eastover, Dilworth and SouthPark inside the city, around Lake Norman in Cornelius, Davidson and Mooresville, and in Weddington, Marvin and Waxhaw in Union County. On the South Carolina side, Tega Cay and the Fort Mill riverfront reach it regularly. Second home jumbo financing around the lake is common enough that we treat it as its own conversation, usually with a larger down payment and more reserves than the same loan on a primary residence.