Government-backed loan programs such as FHA and VA loans can be quite popular, but these types of loans are often limited to certain amounts. Anyone interested in more expensive luxury homes, second homes, or investment properties will need to look at other types of loans to meet their needs. The jumbo loan is often one of the best choices for this type of purchase. Andrew O’Fee – The Yankee Closer offers great rates and flexible terms on jumbo loans throughout Memphis and the surrounding areas.
Most conventional loans that are offered today are purchased by Fannie Mae or Freddie Mac. Loans purchased by these entities must meet certain requirements. If a loan meets the requirements and is eligible for purchase, it is considered a conforming loan. If the loan does not meet the requirements, it is a nonconforming loan. The size of the loan is generally the first thing considered when determining eligibility. To be classified as conforming, a loan cannot exceed $453,100. A Jumbo loan is simply a conventional loan that exceeds the conforming loan limits.
Jumbo loans may be a bit more difficult to qualify for given that they cannot be sold to Fannie Mae or Freddie Mac. On the other hand, lenders can also be flexible with borrowers since jumbo loans do not need to adhere to the same guidelines that conforming loans do. Lenders can set their own requirements although most mortgage companies will follow common industry standards when qualifying borrowers.
Tennessee Jumbo Loan Requirements
- Credit Score – A credit score around 700 is generally needed.
- Down Payment – A 20% down payment is often required for a jumbo loan. Smaller down payment options might be available for borrowers who have exceptional credit and above average income.
- Debt-to-Income Ratio and Income – A debt-to-income ratio of 43 percent is generally required although this may vary on a case by case basis. W2 forms, recent paystubs, and other similar documentation will be needed at the time of application to verify income.
- Property – The property being purchased will need to support the purchase price and the mortgage being applied for.
You should be prepared to provide documentation that outlines liquid assets, non-liquid assets, and any additional loans you may have when applying for a Jumbo loan. This information is used to further support your ability to repay the loan amount you are requesting. The more documentation you can gather ahead of time, the smoother the application process will go.
For Tennessee borrowers interested in more expensive homes, or even second homes, Jumbo loans can be a great option. Contact Andrew O’Fee – The Yankee Closer today for more information on jumbo loans options in Memphis and surrounding Tennessee areas.