The rising property rents may have made you quite restless by now and your desire to have your own home has never been stronger. Every month when rent is due you think about the large chunk of your income that goes to the landlord and how much wiser it would be to put this money towards your own home. But before applying for jumbo loans, it is very important to know whether or not you are able to qualify for one. Following are the important factors:
It is very important to prove that you have the income and reserves to cover all the payments. Qualifying also becomes more difficult for self-employed people than it is for salaried borrowers. Self-employed individuals have to show 2 years of tax returns and a minimum of 60-days’ worth of bank statements to qualify for the loan. Lenders of jumbo loans always make more inspections than conventional loans.
In most cases, your debt-to-income ratio must be less than or equal to 43%, otherwise, you are not eligible for this kind of loan. If the ratio is higher, you can still apply but for that, the lender will need to reassure the possibility of you repaying the loan comfortably.
Usually, the credit score requirement of a jumbo loan is much higher than other loans. Most jumbo loans require at least a 680 credit score. It’s a number entirely set by the lenders and some require an even higher score for approval.
ADJUSTABLE LOAN RATE
Fixed-rate loans are rare in jumbo loans. You have to check and adjust with changing loan rates when you apply for a jumbo loan.
MONTHLY MORTGAGE PAYMENT
Your monthly mortgage payment needs to be within 38% of your income. So make sure your income rate is high enough to fulfill this requirement.
In the past, a jumbo loan could have been approved with limited paperwork but this is no longer possible. Now there is an increased need for documentation. Any claim you make now has to be supported with legal documents. Following is the list of documents required:
- Proof of income from all sources
- Proof of liquid assets
- Documentation on other loans you hold
- Proof of ownership of non-liquid assets like other owned properties
Finally, there is some ease for people looking for a jumbo loan. They involve lower down payments. You have to pay only 20% or 30% down payment for a jumbo loan and, if you have a good credit score, it could be as low as 10%.
ELIGIBLE PROPERTIES FOR JUMBO LOANS
Jumbo loans are designed mostly to accommodate flats, condos or 1-4 family residences. Apart from thinking of buying a primary residence, you can also consider it for further investment purposes.
If you feel that you fit into the above-mentioned requirements, then it may be just the right time for you to say goodbye to renting and hello to your very own dream house!