The DTI needed to qualify for a VA jumbo loan can vary depending on several factors, such as the type of loan, credit rating, and the amount of residual income you have. Some or all of the mortgage lenders that appear on our site are advertising partners of NerdWallet, but this does not influence our evaluations, the lender's star ratings, or the order in which lenders appear on the page. This is a list of our partners. When you look at an expensive home or an average home in an expensive area, a traditional mortgage may not be enough.
A giant loan could be the answer, but you may need a higher credit score and greater cash reserves, among other things, to qualify. Do you need a jumbo loan? You can do this if the amount you want to borrow exceeds the most recent loan limits set by the Federal Housing Finance Agency. Enter your zip code to get started with a personalized counterpart. A jumbo loan is a type of mortgage that is too high for Fannie Mae or Freddie Mac to guarantee, which are government-sponsored companies that set mortgage underwriting rules and buy qualified loans from lenders.
The loans that Fannie Mae or Freddie Mac can buy, also called “compliant loans,” are considered safer investments for lenders than giant loans, and borrowers may find it easier to meet their requirements. You can find the exact valid loan limits for your area using the tool below. The minimum credit score for a jumbo loan is usually at least 680, but some lenders may require an even higher one. The higher your credit score, the lower your interest rate.
Knowing that you have cash reserves and not too much debt makes lenders more likely to approve your giant loan. The requirements vary from lender to lender and depend on your financial history. Some lenders may ask for a second opinion on the value of the home to make sure it's worth the amount you're borrowing. Since you are going to borrow a larger amount, there may be some additional steps in the lending process, which will result in higher closing costs.
The values of Jumbo loans exceed these limits, making them non-compliant loans. Lenders consider non-compliant loans to be riskier because Fannie and Freddie don't guarantee them. If a borrower stops making payments and the giant loan defaults, lenders know they'll have to pay a large amount of change. As for the maximum limits on giant loans, that depends on the lender.
Once you're in the field of non-compliant mortgages, you can borrow as much as your lender agrees to lend. Finding the right lender will require a bit of homework. Start with NerdWallet's picks for the top giant loan mortgage lenders. You can also compare current giant mortgage rates to help determine if now is the best time to start the pre-approval process.
Taylor Getler is a housing and mortgage writer for NerdWallet and is passionate about helping readers understand the ins and outs of homeownership. Read more Property and Casualty Insurance Services offered through NerdWallet Insurance Services, Inc. OK9203 Property %26 Casualty Licenses. Because giant loan lenders are at greater risk, borrowers need to demonstrate that they are in good financial health.
Lenders want to ensure that their loans will be repaid even in the event of financial difficulties. Three of the main requirements for jumbo loans are a high credit score, a low debt-to-income ratio (DTI) and good cash reserves. Learn how mortgage payments work, how to repay them, and the advantages and disadvantages of monthly versus biweekly mortgage payments. A jumbo loan is a type of mortgage that is too high to be guaranteed by Fannie Mae or Freddie Mac, which are government-sponsored companies that set mortgage underwriting rules and buy qualified loans from lenders.
