What Defines A Jumbo Mortgage?

Share this on:

Applying for a mortgage can be a painstaking task as you gather all of your necessary documents, weigh out financing options and plan out your home purchase. The thought of a mortgage can get you a bit nervous in general but hearing the term ”jumbo mortgage” can sound even scarier. What exactly is a jumbo mortgage? Let’s discuss what they are and who they are for.

Definition of jumbo mortgage

In simple terms a jumbo mortgage is a loan that exceeds the “conforming amount” set by the Federal Housing Financing Agency (FHFA). Conforming means that the loan meets the requirements for purchase by a government backed entity such as Fannie Mae or Freddie Mac. Jumbo loans can have preferred interest rates but can also have higher risks for the lender which in turn means they may have requirements that may be more strict for the borrower.

Jumbo mortgage conforming limits

While this may change year to year, the conforming limit for a single-family home in 2021 is $548,250. However, this number may be adjusted in select areas where housing prices are far higher than the average in the country. FHFA sets these baseline amounts each year by evaluating average home values in the United States. New loan limits are always released by year’s end for the upcoming year.

How to qualify for jumbo mortgage

The typical applicant may qualify for a jumbo loan but just with slightly different or perhaps more strict criteria. For one, while a good credit score is important for any loan, jumbo loans are usually granted to those with a score of 700 or more. Also, a debt to income ratio of 36% or so is also a usual guideline. In the end while you may find different deals in different areas you should plan on almost always putting at least 20% down unless you may qualify for a Veterans Affairs (VA) loan.

Loan rates and benefits

While you may think that the higher the risk, the higher the rate but that is not the case. Generally speaking jumbo mortgage rates can be found at slightly lower levels than your average, standard 30-year fixed rate mortgage. The other good thing is that the mortgage interest deduction still applies. Therefore, anyone looking to take advantage of this benefit on their taxes can do so. Check in with your accountant on just how much you can deduct depending on your status and how you file each year. Amounts will vary if you are single, married and filing separately or jointly.

Beth Dickerson

Boston, MA

Primary phone
(617) 510-8565
Email
[email protected]
Address
277 Dartmouth St. , 2nd Floor,
Boston, MA 02116

About The Author

One of Boston’s most reputable real estate brokers, Beth Dickerson has achieved more than $2 billion in sales and thousands of successful real estate transactions over her nearly thirty-year tenure. Beth has received national acclaim from the real estate industry and represents some of the most prestigious residents and properties across Massachusetts. Her enduring record as a top producer comes from the intuitive gift of sensing her clients’ needs. She has built a business that is referral-based at its core—a testament to her relationship-driven approach and penchant for exceeding expectations. It is this nuanced expertise that Beth leverages to guide many of her clients-turned-friends through some of the greatest milestones of their lives.

Beth was the proprietor of her own real estate company before joining the residential division of R. M. Bradley in 1993, where she was a top producer for more than a decade. In 2003, she founded her own boutique real estate firm, Dickerson Real Estate, before merging with Gibson Sotheby’s International Realty in 2007. Today, Beth attributes her success to her comprehensive marketing and advertising strategies, exclusive contact network, and unparalleled insight into neighborhoods like Back Bay, Beacon Hill, the South End and Waterfront. With an understanding that no two clients are alike, she works with clients in all phases of life—from first-time buyers to luxury developers, seasoned sellers and beyond. Beth offers clients the resources to aggressively market their property locally, nationally and globally, and her attention to detail, drive and enthusiasm are unmatched.

Beth has appeared in prestigious media outlets including The Wall Street Journal, Mansion Global, The Boston Globe, and Boston magazine, and was prominently featured as Greater Boston’s real estate expert on WCVB Chronicle in 2020. She has had the honor of serving as President of the Downtown Council of the Greater Boston Real Estate Board. For over ten years, she has been a Co-Chair and Committee Member for the Massachusetts General Pediatric Hospital for Children’s Storybook Ball. She serves as a Board Member of the Community Music Center of Boston and a member for the Perkins School for the Blind, Emerald Necklace Park Conservancy, Justine Liff Luncheon, Youth Villages and the Boys & Girls Club of Boston, among dozens of other organizations throughout the Boston area.

A long-time resident of Boston’s Back Bay, Beth was an active member of the community as she raised her two children: she served as treasurer of the Clarendon Street Playground and was an avid supporter of the Hill House Community Center.