Jumbo Loans

How to Qualify for a Jumbo Mortgage

Lenders set their own underwriting guidelines for jumbo loans, so eligibility requirements may vary. Make sure to get as much information as you can from each Texas lender to understand their specific requirements and underwriting procedures for a jumbo loan.

• Jumbo loans are often attractive to Texas homebuyers with more complex sources of income.With that in mind, it’s common for jumbo loans to require more paperwork and income documentation than conventional loans.
• Texas Lenders may require your FICO score to be higher than 700, and sometimes as high as 720, to qualify for a jumbo loan. Borrowers whose scores fall beneath the normal requirements usually have to offset it with a low debt-to-income ratio.
• Your debt-to-income ratio (DTI) should be under 43% and preferably closer to 36%.
• It’s not uncommon for Texas lenders to ask jumbo loan borrowers to show they have enough cash reserves to cover ten months to one year of mortgage payments.
• 30 days of pay stubs and W2 tax forms stretching back two years, in addition to bank statements and information on any investment accounts.
• If you’re self-employed, you must show two years of tax returns and at least 60 days of current bank statements.
• Jumbo loans are manually underwritten. A finance expert will go through your credit report, assets and bank statements with a fine-toothed comb and bring to light any past missteps. If you have a bankruptcy or foreclosure on your report, you’ll have a harder time getting a loan.
• Your Texas home needs to meet VA appraisal standards (it has to be “clean, sanitary, sound and safe” before you move in). When you close on your loan, a VA appraiser will take a look at the property to make sure it qualifies.

• Many government-backed mortgages are designed for moderate- and low-income borrowers. The U.S. Department of Agriculture loan program has strict income limits that make it virtually impossible to qualify for a jumbo loan because you won’t pass the DTI test.

  The Federal Housing Administration loan requires private mortgage insurance (PMI) for the life of the loan, so using a piggyback loan to bring the balance down to conforming loan limits doesn’t make financial sense. Borrowers would be better served with a non-FHA loan product.

  The U.S. Department of Veterans Affairs program, however, can be used for a jumbo loan. The VA will insure the portion of your loan that falls under conforming loan limits. The down payment requirement is based on the portion of the loan that is above the conforming loan limit. In some cases, this loan is available with zero down payment and no PMI.

  Some Texas borrowers will qualify for special loan programs like physician loans, available to licensed doctors and dentists. This program typically offers jumbo loans with zero, 5 or 10 percent down.

  Benefits of a Jumbo Mortgage

  • Texas Borrowers can get fixed- or adjustable-rate jumbo mortgages with various term options.
  • You can buy various types of Texas properties with a jumbo loan. As long as you meet your lender’s other requirements, there are no government restrictions on how you can use your jumbo loan. You can use most jumbo mortgages for primary residences, second homes, vacation houses and investment properties.
  • While conventional mortgage loans usually require a 20% down payment, jumbo loan down payments can be as low as 5%, with 10% a more common figure.
  • The average annual percentage rate (APR) for a jumbo mortgage is often par with conventional mortgages—and in some cases, actually lower.
  • You have the opportunity to get more loan money to purchase a high-quality property.

  Disadvantages of a Jumbo Mortgage

  • Jumbo mortgage rates may be slightly higher than those on conforming loans.
  • They have stricter qualification rules than other types of mortgages.