Benefits of a Jumbo Loan
Jumbo loans are available in a variety of flexible loan options including fixed or adjustable-rate mortgages. Additionally, since Jumbo Loans don’t have the restrictions of conforming loans, you’ll be able to:
- Receive sums of up to $10,000,000
- Use the loan for investment properties
- Avoid paying for PMI with a sufficient down payment
Additionally, if you choose a fixed-rate Jumbo Loan, you’ll enjoy the peace of mind that comes with knowing that your mortgage payment will not change throughout the life of the loan.
How Jumbo Loans Work
Jumbo Loans are characterized by loan size exceeding the conforming loan limit for your area. Because they exceed this limit, Jumbo Loans are not backed by the federal government, which makes them a little more risky for lenders.
This means Jumbo Loans generally have more stringent qualification criteria, as compared to conventional mortgages. Additionally, to qualify for a Jumbo Loan you’ll generally need:
- A strong credit history
- The ability to make a down payment of at least 10%
- Sufficient cash reserves
All that said, other than the different qualification requirements and the larger loan amounts, Jumbo Loans work much like a conventional mortgage.
With a Jumbo Loan, you’ll make a down payment, cover closing costs, and then start making your monthly payments. Depending on a variety of factors, you may or may not need to pay PMI.
In any case, the large loan amounts of Jumbo Loans will ensure you’re not held back from purchasing the home of your dreams.