Years ago, jumbo loan rates were higher — sometimes much higher — than rates on traditional or conforming mortgages. Today, rates on both types of loans are near historic lows. Recently, the difference in rates between regular (conforming) and jumbo (nonconforming) mortgages has been minimal. On some days, the rates for jumbo loans are even lower than those for conforming loans.
A nonconforming or jumbo mortgage is a type of mortgage that has a balance that is above the limits for government-sponsored loans. In most parts of the country, any loan for a single-family home greater than $424,100 is considered to be ‘jumbo’. (Some high cost-of-living areas, along with Hawaii and Alaska, have higher thresholds.) Jumbo loans are useful where real estate is expensive or for home buyers who want to purchase a higher-priced property. Jumbo loans can be either adjustable rate or fixed rate mortgages.
Qualifying for a jumbo mortgage, however can be a bit more difficult. Generally, you’ll need a credit score of at least 700. The required downpayment is typically higher with jumbo loans than with traditional mortgages. Questions about jumbo loans? At PRMI, we have answers!