The jumbo mortgage is a residential loan amount greater than the conforming loan limit of $417,000. Many Frisco and Plano home buyers that I have talked to in recent years have misunderstood the hard details within the jumbo guidelines and what constitutes the necessary application of this loan.
You can ultimately buy a $600,000 home, and as long as you are putting up a down payment to the extent that your remaining loan amount is below $417,000, you can still go with the conforming loan. Why would you want a conforming ( loan amount less than or equal to $417,000)? Interest rates on non-conforming/jumbo mortgages are slightly higher than conforming loans. Today, a conforming loan with 20% down payment is probably going for right around 4.5%, while a jumbo is more just above the 5% range. Check with your Jumbo MortgageGuyForLife for specific rates and details for your purchase.
You do not necessarily have to have a “jumbo” home just to get a jumbo mortgage.
It’s important you know, the jumbo mortgage is underwritten with many different guidelines than the conforming loan. Most conforming loans will allow as little as 5% down payment, and in the jumbo world you are going to need to prepare for 20% down in most cases.
If you are looking to buy a home in the $500,000 range and put down a small down payment, there may be a solution. You would mostly likely benefit from getting a $400,000 conforming mortgage with the better rate, and getting a 2nd lien for the remaing 15% of the value of the home ($75,000), which brings your total combined loan to value to 95%. ..so you are putting down 5%. This will allow you to put the largest amount of the loan at the lowest rate, therein saving you the most money.
In conclusion, homes priced much higher than the $500,000 range will likely need to involve a jumbo mortgage…that is unless you have a little extra “jack” to put down to make sure that your first loan is at least 80% of the total value of the home, and at or below $417,000.
Lets face it though, even the jumbo/non-conforming rates are still at historic lows in comparison to any loans in the history of mortgage.