Jumbo Loans

You can buy various types of properties with a jumbo loan because there are no government restrictions on how you can use your jumbo loan. As long as you meet your lender’s other requirements, you can use most jumbo mortgages for primary residences, vacation houses and investment properties.

Jumbo loans typically have much higher down payment requirements compared to conforming loans. It’s common to see lenders require 20% down on jumbo loans for single-family units. You may also need a higher down payment for second homes and multifamily units. Finally, the down payment required is based on your loan amount and credit score as well.

Your credit score is a major factor when it comes to getting a jumbo mortgage. Your credit score is a numerical rating of how reliable you are as a borrower. Your score can range from 300 to 850, and several factors are evaluated to determine your credit score.

You’ll usually need a credit score of at least:

• 700, to get a jumbo loan for a one- or two-unit property with a loan limit up to $1 million
• 720, for loans between $1 million and $1.5 million
• 740, for loans between $1.5 million and $2 million
• Between 720 and 760, to buy a second home, depending on the loan amount.

Your debt-to-income ratio (DTI) compares how much money you earn versus how much debt you have. To find your DTI ratio, divide all of your required minimum monthly payments by the amount you earn before taxes.

For example, if you pay $1,000 a month in bills and you bring home $2,000 a month before taxes, your DTI ratio is 50%: $1,000 divided by $2,000.