A jumbo home mortgage is a type of home loan that exceeds the loan limits set by the Federal Housing Finance Agency (FHFA). In 2021, the loan limit for conventional mortgages was $548,250 for a single-family home in most areas of the country, while jumbo mortgages typically start at $548,251 and can go up to several million dollars, depending on the lender and the location of the property.
To qualify for a jumbo home mortgage, borrowers typically need to have a strong credit history and a high credit score, as well as a significant down payment (usually at least 20% of the purchase price). Lenders may also require borrowers to have a low debt-to-income ratio and substantial cash reserves. Additionally, borrowers may need to provide additional documentation of their income and assets, such as tax returns, bank statements, and investment account statements.
The purpose of jumbo home mortgages is to provide financing for high-end properties that may not be eligible for conventional mortgages. These types of mortgages can be used to purchase primary residences, vacation homes, and investment properties, and they can also be used to refinance existing mortgages. Jumbo home mortgages are often offered by private banks, credit unions, and other lenders who specialize in high-net-worth clients.