All You Need to Know About Jumbo Loans in 2022

A jumbo loan is a mortgage loan where the amount is above and beyond the conforming loan limits set by the FHFA or Federal Housing Finance Agency. The conforming loan limit on 1-unit properties in most areas is $647,200, while in high-cost areas, it’s $970,800.

Borrowers who want to purchase more expensive properties can take advantage of this loan option. In addition, there’s no mortgage insurance requirement. However, in exchange for a larger sum of money, lenders typically impose stricter qualification requirements on borrowers than those required by conventional conforming loans.

When Are Jumbo Loans Needed?

Jumbo loans are usually needed when purchasing a home with a higher value than the conforming loan limits permit. For example, a borrower who wants to get a mortgage for property costing $750,000 or more will need a jumbo loan.

Jumbo loans can also be an excellent way for borrowers with lower debt-to-income (DTI) ratios and compensating factors to purchase a home with a higher loan amount than the conforming limit.

Do you need a large loan? Suppose the amount you want to borrow is more than the most recent conforming loan limits set by the Federal Housing Finance Agency. In that case, you can borrow more money than you need.

Conforming Loan Limits Will Increase in 2022

The FHFA sets conforming loan limits for one-unit properties in different counties around the nation. Conforming loan limits in most United States will increase on October 1, 2022. This will happen because the FHFA adjusts the conforming loan limits based on the U.S. median home price.

In any location where the conforming loan limit is above the market value, lenders will be able to offer jumbo loans for purchase or refinance.Since jumbo loan limits significantly impact how much you can borrow. If you need more money than the loanable amount, a conforming loan provides, you might need a jumbo loan.

Your lender might ask you for:

• An Extra Review: The value of your home may need to be checked by someone else to make sure it’s worth the money you’re getting. Interest rates are going up.

• More Money In Your Bank Account: Most lenders require a credit score of at least 680 to get a jumbo loan, but some may want even better scores. The better your credit score is, the less likely you will pay a high-interest rate. Lenders will typically give you a jumbo loan if they know you have money in the bank and not too much debt.

• A Bigger Down Payment and Extra Charge: What each lender wants and how well you’ve done in the past will affect what they want. Because you’re borrowing a lot of money, there may be more steps in the loan process. This means that the closing costs will be more. Jumbo loan rates may be higher than those for conforming loans, but this can change based on the market and individual lender offerings.

Jumbo Loans to the Rescue

If you can’t get all the money you need from a conforming loan, don’t be discouraged. Jumbo loans may be able to help. There are some things to keep in mind about jumbo loans, though. They have stricter requirements and charge more than conforming loans.

Should you get a jumbo loan? The greater home price should offset the higher interest rate and additional qualification requirements. The key is to determine if a jumbo loan is good for you.

Remember that the lender sets the maximum loan amount. In the world of nonconforming mortgages, you can borrow as much as your lender will allow you to avoid defaulting on the loan. If you want to get a jumbo loan, look for a lender who knows how to deal with large loans.

If you need jumbo loans in Arizona, Mortgages by Misty can help you. We are your Tempe home loan experts. Beautiful communities, great schools, and a thriving employment market define living in Tempe, AZ, as well as easy access to the whole Phoenix metropolitan region. With a flexible mortgage, Misty Garrison can help you choose the ideal financing program for your Tempe property. Contact us today at (480) 618-5358 to learn more.