Jumbo Mortgage Loans or Jumbo Loans exceed the maximum loan amounts established by Fannie Mae and Freddie Mac conventional loan limits. Rates on jumbo loans are typically higher than conforming loans. Jumbo Mortgage Loans are typically used to buy more expensive homes and high-end custom construction homes. They also require a higher down payment than traditional loans. Effective January 1, 2018, the conforming loan limits will increase. Anything above the conforming loan limit is classified as Jumbo mortgage.
People typically ask, “What is a Jumbo Loan?” “What is the limit on a Jumbo Mortgage loan?” Generally speaking, loans fall into three (3) categories:
- Conforming Loans – Loan amounts up to $548,250 for the most of US. Loan limit for Hawaii and Alaska is 679,650;
- Conforming Jumbo – Loans that are also called Agency Jumbo, Mini Jumbo, High Balance Conforming Loans;
- Super Conforming – Loan amounts for these type of loans are above the conforming level of $548,250 and up to $679,650. The upper limit of the Conforming Jumbo loan is divided into two (2) categories of Permanent High Cost, which is $625,500 and Temporary High Cost, which is $729,750. Jumbo Loans – Commonly known as Non-Conforming or Super Jumbo. These loans are above $729,750 loan amounts.
Texas Jumbo loan limit
Effective January 1, 2018, the breakdown of the new jumbo loan limits are as follows according to the Federal Housing Finance Agency (FHFA):
- 2,916 counties remain at $548,250;
- 108 counties have loan limits of $679,650 for one-unit properties. These counties are considered the highest-cost housing market areas. They include New York City, San Francisco, and Los Angeles;
- 115 counties are between $679,650 to $1,019,475. These areas are considered having a higher than normal prices but not as high as the above-mentioned counties. The maximum loan amount for properties NOT in Alaska, Hawaii, Guan & US Virgin Islands is $679,650 effective January 1, 2018. However, for properties in Alaska, Hawaii, Guam, and the US Virgin Islands, the new loan limit is $1,019,475.Additional information about Jumbo Loans is available with classifying risks and costs.
Type of Jumbo loan in Texas
Purchase Jumbo loan
- Usually, requires a larger down payment;
- Requires a lower debt-to-income (DTI) ratios;
- Higher credit scores;
- More reserves (emergency funds) in their portfolio;
- Higher rate compared to conforming loans.
TheTexasMortgagePros offers jumbo purchase loans with attractive rates at a low cost to the borrower. Our jumbo purchase loans in Texas is very competitive and easier to qualify for compared to big banks. While other lenders are falling short on jumbo loans, we open our door to lending jumbo loans
Refinance Jumbo loan
- Rate and Term jumbo refinance – a jumbo rate and term refinance either (a) converts an adjustable rate mortgage (ARM) to a fixed-rate or (b) lowers the current interest rate, resulting in lower monthly payment and savings over the life of the loan.
- Home Equity jumbo refinances – allows the borrower to take out a new jumbo loan amount than the current one and have the difference paid to the borrower at closing. The borrower taking advantage of home equity jumbo refinance use the extra money for home improvement, debt consolidation or investing the equity pulled out to other investment tools.
- Custom line of credit – Just like the home equity jumbo refinance, refinancing a jumbo loan to a custom line of credit is used to pay other important expense. The borrower can use the line of credit to pay for college tuition, pay medical bills, do home improvement or use the money for other investments.
Jumbo loan requirements in Texas
A jumbo purchase loan or a jumbo mortgage is looked at differently compared to their conventional counterpart. Credit score requirement is typically higher; a minimum of 680 middle credit score is required. The typical jumbo mortgage borrower has a middle FICO score of 740 and above. It’s not common for lenders to see a borrower’s credit score in the upper 700’s to low-mid 800’s when originating a jumbo loan.
Texas Jumbo loan considerations
Interest rates are usually higher on jumbo refinance loans compared to conforming loans. They are usually available in a variety of form: fixed rate and adjustable rate loan options. There’s also the interest-only loans or temporary buy-downs.
With interest-only option loans, a borrower cannot build equity through the monthly interest-only payments. In order to build equity, a borrower has to make voluntary principal payments during the interest-only period when making payments.
The line of credit has a variable interest rate which may increase or decrease the monthly payment as interest rates fluctuate. The borrower can convert a portion of, or all of the outstanding line-of-credit to a fixed rate amortized in 5 – 20-year term.
Loan-to-Value Ratio for Jumbo loans in Texas
There is also the loan-to-value requirement. This is usually looked at on an individual basis since a borrower’s situation for jumbo loans varies from one borrower to the next. At a minimum, a jumbo loan borrower is required to come up with 10% down payment. Typically, 20% is required to qualify for a jumbo purchase loan. However, some borrowers will be required to come up with 25% – 30% down payment depending on their situation and type of property being purchased.
For details about Jumbo Loans and other non-conforming loans, contact our Home Loan Specialists at (866) 828-9198.
All loans are subject to underwriting or investor approval. Other restrictions may apply. This is not an offer of credit or a commitment to lend. Guidelines and products subject to change.