5 Jumbo Loan Secrets Every Homebuyer Should Know

If you’re thinking about borrowing more than the Fannie Mae and Freddie Mac conforming loan limits allow, you will need a type of mortgage called a non-conforming loan, or “jumbo” loan.

When homebuyers think about jumbo loans, however, they often are not picturing them accurately. They imagine that these mortgages are automatically more expensive. In truth, they can be both flexible and affordable. Let’s take a look at a few jumbo loan secrets you might not know.

1. Down payments can be lower than you think. One assumption about jumbo loans that is pretty widespread is believing you will have to put down 30%. In reality, down payments for jumbo mortgages are much more in line with down payments for conforming loans. You can often buy a home with a jumbo loan with 20% down, sometimes even less. So, if you do not have 30% sitting around ready to be spent, don’t let that stop you from checking if you can get a jumbo loan.
2. You might not need PMI. If you do not put down at least 20% when you buy a home using a conventional conforming mortgage, you have to pay for private mortgage insurance (PMI). This is an ongoing extra expense that can add up to thousands of dollars over time. If you can get around having to pay for PMI, that can amount to big savings. One way you can do that is to put down at least 20%. But another option is to choose a type of home loan that does not force you to pay for PMI if you pay under 20% down. With some jumbo loans, this requirement does not exist. Ask your lender about it.
3. Jumbo loans often have affordable interest rates. You would think that the more money you borrow, the more expensive your interest rate is going to be, since bigger loans are riskier. But there are exceptions. And with jumbo loans, you may find that the opposite is true. It is actually very common for jumbo loans to have a lower interest rate than conforming loans. So, this is an opportunity that it’s important not to overlook.
4. Jumbo loans aren’t just for mansions. Many people use jumbo mortgages to buy luxury homes. But that does not mean that every person who buys a home with a jumbo loan is moving into a mansion. Certain high cost areas throughout the US have corresponding higher conforming loan limits. But even with those higher limits, there are still lots homes that require a larger mortgage to buy, even though they are not necessarily overly large or luxurious. Plus if you have a strong borrower profile, and you receive a more competitive interest rate quote for a jumbo mortgage than you do for a conforming loan, it might just make more sense from a financial standpoint to go with the jumbo mortgage. Similarly, this decision might make  sense if you are trying to avoid PMI, and you have found a jumbo mortgage that makes that possible.
5. Even first time homebuyers can qualify for a jumbo loan. First time homebuyers often look toward mortgage types such as conventional conforming loans or FHA loans. They may not even think about jumbo mortgages, because they might not even realize that they are eligible to apply for them. There’s nothing in the rules for jumbo loans that says that first time homebuyers can’t get them. The only thing that might hold you back is if you are not that well established yet in your career, are still working on building your credit score and income. But if you have a strong profile, you may be able to apply successfully for a jumbo mortgage with competitive rates and features to buy your first home.

Apply for a Jumbo Loan in Florida

Florida State Mortgage Group is based in Fort Lauderdale. We can help you apply for a jumbo loan, conforming loan, or a different types of mortgage anywhere in Florida. To get started, please give us a all at (954) 359-3000 to schedule your consultation. Let’s get you into your new home.