A jumbo loan sounds big, right?
It is – but really, what it means is that it’s a larger amount of money than the maximum value of a conforming loan.
Wait – what’s a conforming loan?
A conforming loan is a loan that meets guidelines set by Fannie Mae and Freddie Mac.
What is a Jumbo Loan?
A jumbo loan exceeds the loan limit of conforming loans, so right now, it’s any loan that’s over $484,350 for a one-unit property.
Fannie Mae and Freddie Mac, which set the loan limit on conforming loans, use a county’s median household income to figure out what the conforming loan cutoff is for the area. In some areas, where people make more and things are more expensive, the loan limit is higher.
What Kind of Credit Do You Need for a Jumbo Loan?
Many lenders want you to have a credit score of at least 700 to take out a jumbo loan. Compare that to a conforming loan, which typically only requires a credit score of 620.
Every lender is different, though. You may find a lender who has less stringent requirements when you’re shopping for your own jumbo loan.
Do You Have to Pay PMI on a Jumbo Loan?
If you were taking out a conventional loan, you’d have to pony up the right down payment if you don’t want to pay for private mortgage insurance, or PMI.
Some jumbo loan lenders require you to have a 20 percent down payment, while others require you to have 25 percent. For many jumbo loans, PMI isn’t even an option – so you absolutely have to have the right down payment.
Are You Buying a Home or Land for Sale in Lake City?
If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.
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