When it comes to jumbo loans, you may have to meet requirements that are more strict than what traditional loans offer.

During the first time when you hear jumbo mortgages, you may think that it is for millionaires, but that is not always true. Compared to most home loans, a jumbo loan means a more substantial debt.

However, depending on the price of the house you want to buy, your income and the loan options available to you, a jumbo loan may be the best option for you.

Learn how to get a jumbo loan, what it is and if it’s the right one for you.

What’s a Jumbo Loan?

A jumbo loan or a jumbo mortgage is one that far exceeds the limits of the conforming loan that the Office of Federal Housing Enterprise Oversight has set. Conforming loans have limits on the number and amount of mortgages backed by government-sponsored enterprise or program.

Since jumbo loans don’t fit the FHA, Freddie Mac, and Fannie Mae box, these are often called non-conforming loans. In a nutshell, jumbo means that the amount of the loan far exceeds the set limit of the area where the house you want to buy is located.

How Big Are Jumbo Loans?

Texas jumbo loans are large, but these don’t have to be seven digits big. Based on the loan limit, the loan is referred to as a jumbo loan when it exceeds at least $1 more than what is set.

On average, $453,100 is the conforming loan limit for properties last 2018. Some areas have higher limits depending if the place is a high cost or not.

How Do I Qualify For A Jumbo Loan?

Just like other mortgages, getting jumbo loan approval is based on a basic formula. The eligibility depends on your credit score, cash reserves, income, employment status, debt, property use, and property type.

Credit Score

Jumbo loans have higher requirements for credit scores. Some require a score at a range of 700 to 720 or even higher

Debt-to-Income Ratio

The allowable debt-to-income ratio for a conforming mortgage is higher than that of a jumbo loan. A high DTI usually means an expensive loan. If you are applying for a jumbo loan, expect that a 43 to 45% or lower is the limit for a DTI.


Since the government doesn’t insure mortgage lenders for jumbo loans, they will want you to have some cash reserve of around 3 to 24 months. On the other hand conforming loans require as low as around one month of your expenses at home.

Down Payment

For most mortgages, lenders require a 20% down payment however they will ask for more for jumbo mortgages. Some borrowers avoid trying to pay private mortgage insurances (PMI) without the 20% down use the piggyback loan.

Also Read: How Do I Get A Mortgage With No Down Payment?

Piggyback loans are the second mortgage that is taken at the same time as the first. This is done to cover the purchase price. If you are having problems with your down payment, ask first if they permit assistance. Some allow gifted funds.

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