Jumbo Home Loans

Jumbo loans provide borrowers a way to finance a home that has a higher price than the limits that most traditional or other conforming mortgages have. If you're interested in purchasing a home in a higher price range and meet your lender's requirements to qualify for a jumbo mortgage, such a loan may be your best financing option.

In Florida, the maximum amount on conventional loans is $726,200; a loan of $726,201 or higher for a single-unit property would be a jumbo loan. This amount usually changes annually but can be adjusted more frequently.

We invite you to apply now online, or contact us by phone to start our fast application process. There are no application fees, up to 90% financing is available¹⁶, and a no private mortgage insurance option for qualifying borrowers. You'll also enjoy SCCU's Exclusive Interest Rate Guarantee¹⁸ with our great rates and SCCU servicing for the life of your loan.

The pros of a jumbo mortgage loan include:

• Higher loan amounts allow qualified buyers to finance more expensive properties. Jumbo mortgage rates can be competitive compared to traditional, conforming loans.
• At SCCU, up to 90% financing is available¹⁶
• At SCCU, there is a no private mortgage insurance (PMI) option for qualified buyers.

The cons include:

• The credit requirements for jumbo loans can be difficult for some borrowers to meet, so you may need a high credit score.
• It may require more extensive documentation compared to conventional home loans.
• Closing costs may be higher.

If you have questions about the advantages and disadvantages of jumbo loans, please reach out to us.

Since larger loan amounts would seem riskier for mortgage lenders than small amounts, jumbo loan rates can be surprisingly competitive and even lower than the interest rates on some conventional or conforming loans.

Space Coast Credit Union offers competitive rates on jumbo loans for 10-, 15-, 20- and 30-year terms, plus 5/1 and 10/1 adjustable rate mortgage terms. Contact us for more information on our jumbo loan rates.

Since jumbo home loans are non-conforming—loans that entities such as Fannie Mae and Freddie Mac do not buy—the qualifying requirements can be stringent. If you are interested in applying for a jumbo loan, be prepared to meet standards that may exceed those of a conforming mortgage, including:

• A higher credit score: Other types of home mortgages are available to borrowers with credit scores as low as the low 500s, but many jumbo loans require a credit score of approximately 700 or even higher.
• More detailed documentation: You may need to provide several years' worth of full tax returns, plus extensive documentation of your income, investment accounts, bank statements, and more.
• A lower debt-to-income ratio (DTI): DTI is calculated by dividing the total of your monthly debt obligations by your gross income. Lenders may look for borrowers to have a DTI of 45% or less.
• Property appraisals: Some lenders require more than one appraisal, but all lenders want to verify that the property's value supports both the amount the borrower is seeking and the property's purchase price.
• Cash reserves: Sufficient cash in the bank may help mitigate a negative credit event with some lenders or make lenders a bit more flexible with approval.

Keep in mind that if you're self-employed, you may need to meet additional requirements in order to qualify for a jumbo home loan.

Private mortgage insurance (PMI) is paid by borrowers and is intended to protect mortgage lenders in case borrowers go into foreclosure. In most cases, PMI is required on a conventional/conforming loan if a borrower makes a down payment of less than 20 percent. With jumbo loans, however, whether PMI is required is up to the lender, which may instead allow for smaller down payments with no PMI. At Space Coast Credit Union, we offer jumbo mortgage loans to qualified buyers without a private mortgage insurance requirement.

The main differences between conforming and non-conforming loans are:

• Whether the loan can be bought by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), Freddie Mac, Fannie Mae, or the USDA—Soon after closing, loans are typically sold by financial institutions to one of the aforementioned mortgage investors, even if the lender continues to service the loan. Those types of loans are referred to as "conforming" since they conform to the investors' requirements.
• The loan's limits—Each county in the U.S. has its own limit on the maximum amount of a conforming loan, with higher limits in counties where prices are higher. Loans that exceed county limits are jumbo loans. These non-conforming loans don't conform to the requirements of the VA, FHA, USDA, Fannie Mae or Freddie Mac, so can't be sold to them.

Since jumbo loans are known primarily as financing for homes with purchasing prices in the upper $725,000 range, it's understandable to assume that jumbo mortgage applicants are experienced borrowers with very high incomes. In reality, however, jumbo loan borrowers may be first-time buyers with more moderate incomes but sufficient assets or net worth that meet qualification requirements.

If you are trying to determine if a jumbo home loan is right for you, you should take into account your desired price range. If the homes you're looking at are above the jumbo loan limit and you can satisfy the debt-to-income ratio, loan-to-value ratio and credit score that your particular lender requires, a jumbo loan may be an option for you.

SCCU offers jumbo loans on primary residences and second homes. Some lender also offer jumbo loans on investment properties, though SCCU doesn't.