Mortgages Part 4F: New York Jumbo Mortgage
A jumbo mortgage is a home loan with an amount that exceeds conforming loan limits imposed by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy mortgages from lenders. Loans exceeding the conforming loan limits are harder to sell in the secondary market, and thus the lenders have stricter guidelines.
New York Jumbo Mortgage Loan Limits
In most US counties, any mortgage of more than $417,000 is a jumbo loan. Some counties in the Hudson Valley area are considered high cost areas and have a higher limit of $625,500, (as of June 2014. The limits may change every year) including: Westchester, Rockland, and Putnam Counties.
Requirements of a jumbo mortgage
While the underwriting process for jumbo mortgages is similar to that of a conforming mortgage, the requirements differ:
- There is no private mortgage insurance with a jumbo mortgage. The minimum down payment requirement is usually 20% or more.
- The borrower's credit also needs to be excellent, usually 700 or above.
- Lenders usually have stricter debt-to-loan requirements.
- Lenders may require borrowers to have six months' worth of reserves or more in their bank accounts after closing.
- Appraisals may also be stricter. Sometimes the bank may require two appraisals done in order to safely evaluate the risks involved.
Having to get a jumbo loan is not all bad. Historically, jumbo loan rates are higher than that of conforming loans. But since 2013, jumbo loan rates are at times even lower than that of conforming loans.
If you need a jumbo loan and cannot meet its strict requirements, some lender help you get a piggy back loan. For example, if you want to get a loan of $500,000, the lender will give you two loans: one for $417,00, and one for $83,000, making both loans a conforming loan. We will discuss piggy back loans in more details in the next article.
Mortgage Guide Home | Previous Article: VA Loans | Next Article: Piggyback Loans
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