Ever since the housing bubble burst in the last decade, jumbo and super jumbo lenders have applied harsher scrutiny for applicants. Gone are the days of simply handing out loans to borrowers, regardless of their financial stance and credit score. Lenders are forced to protect their investments by applying a more rigorous application process for these types of loans. So what does it take to qualify for a jumbo or super jumbo loan? Generally speaking, borrowers will need to fulfill the following requirements:
Good Debt to Income Ratio
Simply put, a borrower has to make more money than they’re owing. Lenders are looking for borrowers who can cover their monthly interest, taxes, and insurance. In general, borrowers will want to have debt obligations that only consume a 43% of their income or less.
Superb Credit Score
A credit score tells creditors how well a borrower keeps up on his or her payments. A high credit score reflects borrower dependability. The credit scale is on a range between 300 and 850, 850 being the best credit score possible. Jumbo and super jumbo loan borrowers will need to aim for a score of 700 or better. There are several ways to check your credit score online if you’d like to see where you’re at!
Capital Enough for a Down Payment
Since jumbo and super jumbo loans are generally riskier than lesser mortgage loans, lenders might require that you put up a large down payment right off the bat. A borrower can expect to invest around 20% of a home’s value as an initial down payment when applying for a jumbo or super jumbo mortgage loan.
Now none of these guidelines are true black-and-white yes-or-no guidelines. Only a lender can determine whether a candidate’s specific circumstance fits the lender’s loan standards. So call on MortgageBase if you’re thinking about taking out a jumbo or super jumbo mortgage loan. We’ll let you know if you’ll be able to qualify with us!