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What Is A Jumbo Loan? A Guide For Home Buyers

When you are planning to purchase a home, you may immediately look for a house that would live up to your dream. However, with the current housing inflation, you may think of stepping a little backwards in your fantasy and sticking to a house within your means. If you are really looking forward to buying a high-end home, a jumbo loan can make it possible for you. In this article, we are going to explain what a jumbo loan is and what things you need to prepare for you to qualify for it. Make your dream home a reality by considering the following. 

What is a Jumbo Loan? 

A jumbo loan, as the name suggests, is a type of mortgage that allows you to borrow more than the loan limit in your respective area. It surpasses the conventional loan limits set by Fannie Mae and Freddie Mac, the two government-sponsored entities that buy and sell mortgages. In 2021, the conforming loan limit for a single-family home is more than a half million dollars in most parts of the United States. Any loan that exceeds this limit is considered a jumbo loan.

How to be Eligible for a Jumbo Loan? 

As much as it is ideal that you can exceed the usual loan limit, this also has a high standard. Due to the larger loan amounts associated with jumbo loans, the eligibility requirements can be more stringent than those for conventional loans. You’ll typically need a high credit score (usually 700 or higher), a low debt-to-income ratio (usually below 43%), and a sizable down payment (usually at least 10-20% of the home’s purchase price). If you tick all the boxes, then you are good to go. 

What are the Advantages of a Jumbo Loan? 

The most significant advantage of a jumbo loan is the ability to purchase a high-end home that would otherwise be out of reach with a conventional loan. So, if you are already set to buy a house for more than half a million dollars, you may want to take your chances with a jumbo loan and live in your dream home. Moreover, jumbo loans also offer lower down payments which typically range from 5 – 10%. This has competitive interest rates and more flexible underwriting requirements compared to other non-conforming loans.

What are the Risks Associated with Jumbo Loans? 

Jumbo loans can come with a higher level of risk compared to conventional loans, especially in uncertain economic times. The larger loan amounts can make it more difficult to sell the home if you run into financial trouble, and jumbo loans may have higher interest rates, which can increase your monthly mortgage payments.


In conclusion, if you’re looking to purchase a high-end home that exceeds the conforming loan limits, a jumbo loan may be the right choice for you. However, it’s important to understand the eligibility requirements, advantages, and risks associated with this type of mortgage before making a decision. At Mann Mortage, you can make sure you are about to work with knowledgeable lenders. Feel free to contact us today and make an informed decision that’s best for your financial situation.

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