Should You Get a Jumbo Loan? Your Questions Answered

When the regular mortgage is not enough for you, why not try jumbo loans?

Have you ever heard of this before? Well, let us give you a bit of a background, so you know what you’re getting yourself into.

If you prefer to buy an expensive home or if you are searching in the hot real estate market, you may find yourself in a pinch. Almost all of the traditional loans you are checking have limits, and the amount you need to borrow far exceeds these limits.

What can you do?

Should you give up on your dream home? Certainly not!

Your best option for this is to get jumbo mortgage Texas. Generally, it helps you borrow a higher amount compared to what is possible from traditional loans.  These jumbo loans are the mortgages that are way too huge for Freddie Mac and Fannie Mae to back up.

Conforming home loans and jumbo mortgages still have bits of similarities however you need to know the differences between them if you want to avail a jumbo loan. This includes the credit scores and cash reserves you have to qualify for aside from the amount of down payment.

Basics Of A Jumbo Loan

A jumbo loan, also known as a jumbo mortgage, is a home loan that’s way bigger than what Fannie Mae and Freddie Mac have set as limits for loans. Because of this, they are often called non-conforming mortgages and are seen as a bit riskier for the lenders as they are not guaranteed. What does this mean? In cases where a borrower defaults, the lender has no protection from any of the losses.

You can avail jumbo loans with either an adjustable rate or a fixed interest rate. Plus, they also come in many different terms. If the amount you need is way above the loan limits in your country, you may need a jumbo loan.

How to Qualify For A Jumbo Loan

Since the loans are way too risky and large for lenders, expect that jumbo loans are more strict when it comes to its requirements.

Credit Score

Unlike traditional loans, jumbo loans require a 700 or more FICO score. Some lenders allow a score of 680 while others ask for 720.

Debt-To-Income Ratio

Check your debt-to-income ratio as it ensures that you are not over-leveraged. Some lenders are flexible on this factor while others put a limit of 45%.

Cash Reserves

If you have a lot of money in the bank, you can be confident that you have a higher chance of getting approved for a jumbo loan. Lenders often ask loan borrowers to show proof that they have cash reserves that is enough to cover approximately a year of mortgage payments at least.


You have to be ready when you apply for a jumbo loan. Some lenders ask for a second appraisal of the house you want to purchase.


You have to prove your financial health and provide extensive documentation compared to confirmation loans. Be prepared to show your W-2s, full tax returns and 1099s aside from the bank statements and information on your investment accounts.

Post author