Texas Jumbo Loan
The Texas Jumbo loan is big, like our great state itself! If you need such a large loan, be prepared. Here’s what you need land the big one.
If you need a Texas-sized loan to purchase the home of your dreams, you may need to take out a jumbo loan.
Jumbo home loans are mortgages that cover more than the conforming loan maximum amount. While traditional loans max out at $300,000-$500,000, jumbo loans have higher limits to help borrowers get financing for homes that fall outside of the maximum limit for their area.
In Houston, the limit for conforming loans is $331,200. A Houston jumbo loan allows you to borrow more than the conforming loan limit so you can purchase your home. Texas jumbo loan limits are much higher than borrowing limits on traditional loans.
Jumbo loans are a good mortgage option for buyers who can’t get financing through a conventional loan. If you need a Texas mortgage, here’s what you need to know before you apply for a Texas jumbo home mortgage loan.
Your Guide to Jumbo Loans in Houston, Texas
If the property you wish to purchase exceeds the FHA’s conventional mortgage limits, you will have to apply for a jumbo loan.
Lenders consider jumbo loans to be high-risk because they aren’t backed by Fannie Mae and Freddie Mac. If you default on a jumbo loan, your lender will lose money.
Jumbo loans are backed by private investors. Due to rigorous standards, rates on jumbo loans are competitive.
You can apply for a fixed rate or adjustable rate jumbo loan.
Here’s how you can qualify. Read on or contact us to get more details.
How to Qualify for a Texas Jumbo Loan
Before you apply for a Jumbo loan, you should take the following steps to ensure lenders will view you as an ideal borrower. These are the jumbo loan qualification requirements for 2020.
- Raise Your Credit Score
Jumbo loans require you to have a higher credit score than traditional loans. Work on your credit, and make sure your score is at least 720 before you apply. Your lender will run a credit report when you meet with them.
- Pay Off Your Debt
When you apply for a jumbo loan, your lender will consider your debt-to-income ratio. If you have too much debt, you may not be approved for a jumbo loan. Most lenders want to loan to borrowers with a debt-to-income ratio of less than 45%.
- Save Up Some Cash
You’ll need enough cash to cover your down payment when you apply for a jumbo loan. Many lenders will also want you to have at least one year of mortgage payments in your bank. Having enough cash stored up shows lenders you are at low risk of defaulting on your mortgage.
- Gather Documents
When get ready to buy a home in Texas and apply for a loan, you are going to be asked to provide a lot of documentation. Tax returns, bank statements, investment account information, and pay stubs are just a few of the things you will be asked to provide.
Have all these documents in a neat folder and be able to hand them over to your lender without a fuss. They are more likely to cooperate with borrowers who seem prepared and organized.
Your home may have to be appraised twice when you take out a jumbo loan.
Jumbo and Conventional Loans: The Key Differences
There are a few key differences between jumbo loans and traditional loans that you should be aware of.
Higher Interest Rates
While interest rates on jumbo loans are competitive, they can be more expensive than conventional mortgage rates. Depending on your financial health, you may be able to get a lower rate. Don’t be afraid to explore your options and choose the lender that offers the best rate.
Fees and Closing Costs
Large loans come with large fees. Be sure to have enough cash saved up to cover closing costs and any fees that come up during the buying process. Fees vary by lender, so be sure to shop around.
Jumbo Down Payments
Naturally, the bigger your loan, the bigger your down payment. Most lenders require a 20% down payment at minimum. Some lenders may allow you to make a smaller down payment if you have a stellar financial record, but the bigger your down payment, the less interest you’ll pay over time.