Loan Options for Buying or Refinancing a Home:
Jumbo Loans
What counts as a jumbo loan?
What counts as a jumbo loan depends on which part of the country you live in. While in most counties a jumbo loan is any mortgage over $510,400 for a one-unit property, this limit does increase for both high-cost areas and if there is more than one unit. In Alaska, San Francisco, Los Angeles, New York City, Washington, D.C, and a handful of high-priced towns, like Aspen, Park City, and Jackson Hole, the threshold for a jumbo mortgage for a one-unit property is $765,600. In other cities, such as Boston, Salt Lake City, Denver, and Seattle, the threshold for a one-unit property jumbo loan falls somewhere between $510,400 and $765,600.
Advantages of jumbo loans
The main advantage of jumbo loans is their size. If you have your eye on a property that exceeds FHFA loan limits and you don’t have enough money on hand to cover the amount being asked for by the seller then you are going to need a jumbo loan. In recent years, interest rates for jumbo loans have also come down and they are now comparable to interest rates offered for conventional conforming loans. Down payment requirements on jumbo loans have also decreased in recent years as the economy has recovered.
Types of Loans
A conventional home loan is any loan not guaranteed by a government agency. These are by far the most common type of home loans and, if your credit score is good, they are the easiest to apply for. Conventional loans are divided into two categories: conforming loans and non-conforming loans. Since non-conforming loans, such as jumbo loans, are discussed on separate pages of this site, below we will look exclusively at conforming loans.
Military members and their families may be able to qualify for VA home loans. Started by the U.S. Department of Veterans Affairs (VA) in 1944, these home loans have enabled countless veterans to qualify for attractive home financing options. VA home loans are guaranteed by the VA and offered by VA-approved lenders. For qualifying borrowers, they could be a good alternative to conventional loans.
If you are looking to buy a luxury or high-priced home then you may want to look into applying for a jumbo loan. A jumbo loan is a mortgage that exceeds loan limits set by the Federal Housing Finance Agency (FHFA). As such, while they are a conventional loan in the sense that they are not insured by any federal agency, they are considered a non-conforming loan because they exceed federally defined loan limits.
FHA loans are a popular home financing option, especially for people with poor credit scores or low income. These loans are insured by the Federal Housing Administration (FHA), which is a government agency, and provided by FHA-approved lenders. While FHA loans are available to everybody, they are a particularly good choice for individuals who are having trouble getting approved for conventional loans.