With soaring real estate prices, conventional loans may not be enough for some home buyers who are looking for a bigger, more expensive home. If your home price is above a certain limit set by the Federal Housing Finance Agency, you’ll need a jumbo loan.
But what is a jumbo loan, and how can you find competitive loan terms to secure jumbo mortgages in Exton, PA? We’ll walk you through the requirements for jumbo loans in Exton, the application process, and expert mortgage advice and tips to get the home of your dreams.
Understanding Jumbo Mortgage Loans
Let’s start with the basics — What even is a jumbo mortgage loan? Designed for real estate purchases that go above the conforming loan limits set by Fannie Mae and Freddie Mac, jumbo loans are a vital tool for homebuyers looking at higher-priced properties. For 2023, the conforming loan limit for most areas in the is $726,200. But in some high cost of living areas, you can see jumbo loan limits increase up to $1,089,300.
In our area of Pennsylvania, the conforming loan limit is $766,550 — so, slightly above the national average. This means that you won’t be able to get a conventional mortgage if the loan amount exceeds this limit.
With the median home price being in the mid $ 500s, it’s not uncommon for our team at Penn Street Mortgage to help clients secure a jumbo loan that fits their needs and home purchase price. You can explore how the price of your home might impact your monthly payments or down payment requirements by using our Mortgage Calculator to customize terms and numbers.
Why Should I Consider a Jumbo Loan?
While they come with different requirements and restrictions, a jumbo loan can be a great tool for qualified buyers to buy a more expensive property.
Some of the benefits that come with a jumbo loan include:
- Higher Borrowing Limit: In a real estate market like Exton, PA, there are many high-end properties that cost more than the typical loan limits. Due to the higher borrowing limits, you’ll have to explore a jumbo loan to potentially purchase any of these properties.
- One Large Loan: Instead of taking multiple loans to cover the cost of a high-priced home, a jumbo mortgage only requires one financing package that can simplify the terms and conditions as well as your monthly mortgage payments.
- More Flexibility: Jumbo loans can offer more flexibility in terms of the amount and terms compared to conventional mortgages, allowing more specific terms that can meet a buyer’s needs and budget.
How Do I Qualify for a Jumbo Loan in Exton, PA?
As soon as you know you need to secure a jumbo loan for your next property purchase, you should reach out to a mortgage broker like Penn Street Mortgage, who offers jumbo loans and is familiar with the process. Since there are different eligibility requirements, working with one of our experienced Exton, PA loan officers can make a big difference in your experience.
Since the amount borrowed is higher, there’s more risk inherently involved for the lender. That’s why a jumbo loan has stricter requirements to qualify, including:
- Higher Credit Scores: A credit score above 700 is usually desired, with those above 740 receiving the best rates.
- Lower Debt-to-Income Ratios: Typically, mortgage lenders require a DTI ratio at or below 38%.
- Larger Down Payments: You’ll need at least 10-20% of the property’s purchase price.
- Proof of Reserves: You might have to show you have enough cash to cover 6 to 12 months of mortgage payments.
- Appraisals: One or sometimes two appraisals may be necessary to confirm the property’s value.
How Do I Apply for a Jumbo Loan?
When it comes to applying for a jumbo loan, the process is actually pretty similar to applying for a conventional mortgage. You’ll start with a complete financial review of all your finances, including income, assets, debt and more, to confirm you’re eligible and can afford the monthly mortgage payment. Make sure you submit all required documents to your lender, including tax returns, W-2s, bank statements, and any other financial documents requested.
One of the biggest differences with getting a jumbo loan is the appraisal process. With higher-end properties, a financial institution might get multiple appraisals to ensure they have a clear understanding of the risk and value of the property. This is just to confirm the property is worth what you’re paying for it, and the bank feels confident about their loan.
Since there is an increased risk for a lender, it’s not uncommon to see that interest rates could be higher for a jumbo loan. That’s where our team at Penn Street Mortgage can help. We’ll shop around to ensure you get the best interest rate possible for your specific property purchase based on your budget. With access to multiple banks and financial institutions, we can compare rates to get you the most competitive offer available.
Finding the Right Lender for Jumbo Loans in Exton, PA
Not all lenders or mortgage brokers provide jumbo loans, and those that do often have a wide range of terms and rates. Choosing a mortgage broker with a proven track record in jumbo loans — like Penn Street Mortgage — is an important decision. Given the stricter requirements and higher interest rates associated with these loans, the mortgage broker you select can significantly impact your approval chances for a jumbo loan.
At Penn Street Mortgage, we’re committed to offering personalized guidance and support to our clients, always striving to secure the most competitive rates available.
If you’re ready to get approved for a jumbo loan in Exton, PA or have questions about where to start, give our team a call or contact us today. With decades of experience, we can help you navigate the jumbo mortgage approval process and get you into your dream home — with a great interest rate.