You’ve found your dream home — but the asking price is quite high and you’re not sure if you can get a mortgage for it. But here’s the good news: If your financial situation and credit score are good, you might qualify for a Jumbo mortgage. So, what is this exactly?
Exceeding Fannie Mae and Freddie Mac Loan Limits
As SF Gate explains, the Federal National Mortgage Association — or Fannie Mae — and the Federal Home Loan Mortgage Corporation — or Freddie Mac — are government-sponsored organizations that provide mortgage lenders with financial security by buying certain loans from them. These loans have to be “conforming” — in other words, they have to meet certain criteria, including the amount of the loan. If a loan exceeds the dollar amount, it doesn’t conform — in which case it won’t be secured by Fannie or Freddie and becomes a jumbo loan.
For lenders, the attraction of issuing jumbo loans is predominantly that the borrowers in question have a higher net worth than average, so the lenders can offer them more financial products and services along with the loan.
Depending on factors such as median income and property value, different counties have different standards of living. As a result, within California, there are varying floors for jumbo loans. For example, according to Loan Limits, in 2019, the limit for a one-unit property in Los Angeles County is $726,525, while in Ventura, it’s $713,000.
Benefits of a Jumbo Loan
The main benefit of a jumbo loan is that it allows you to exceed the established Fannie Mae and Freddie Mac limitations and enables you to purchase a property with a high asking price. Alternatively, you can use it to put less cash down on a high-priced property and finance a greater part of the acquisition.
Mortgage Broker in Los Angeles
If you’re interested in taking out a jumbo loan to finance your next home, remember to discuss all of your options with a trusted mortgage broker in Los Angeles. Contact Peak Finance Company for more information.