When it comes to Jumbo loans in West Palm Beach, the most important factors to consider are the available terms, interest rates, and down payment options. In this post, we will shed some light on the subject and review a few tips to help you find the perfect jumbo loan.
First, it’s important to establish what exactly is considered a Jumbo loan. In Palm Beach County and most of Florida for that matter, the conforming loan amount set by Fannie Mae or Freddie Mac is $726,200. So any loan amount beyond this would be labeled a Jumbo mortgage.
Second, borrowers should understand that credit and loan-to-value ratio (LTV) are the key factors that lenders use when determining your eligibility for a jumbo mortgage. In general, an LTV of 80% or less will result in the best terms and lowest interest rates when compared to 90% or 95% financing programs.
Jumbo Piggyback Loans:
A piggyback loan is a combination of two loans that lenders often use for a variety of reasons. First, they allow eligible buyers to avoid paying Private Mortgage Insurance (PMI). The first mortgage is typically 80% or less of the purchase price while the second mortgage and down payment cover the difference. This is popular among Jumbo borrowers because they don’t have to worry about paying PMI on such large loan amounts.
For example, let’s say someone is looking to buy a house in West Palm for $900,000 and plan to make a 10% down payment. They may take out an 80% first mortgage of $720,000 and a 10% second mortgage or piggyback loan of $90,000. The remaining 10% would be their down payment. Doing this would allow them to avoid having to pay PMI on a loan amount so large. More importantly, the primary mortgage would remain under the conforming loan limit, so the borrower will get to take advantage of lower agency interest rates.
Jumbo Loan Qualifying Reminders:
- Determine eligibility by checking your credit score, most jumbo loans will require good credit. The exact min scores will greatly depend on the borrower’s down payment. Check the jumbo purchase page for more details.
- Debt-to-income ratio: most programs are limited to 45%-50% DTI. Too much debt can prevent you from qualifying for your desired loan amount.
- Most jumbo programs are full documentation loans. So be prepared to provide the full financial documents needed for loan approval. *Self-employed borrowers in West Palm have bank statement qualifying options starting at 90% LTV.
- Verify income and employment, as most jumbo lenders require 2 years of documented and steady income.
- Provide proof of assets, expect to show where the down payment and closing costs are coming from.
- Loan amount limits do vary based on the down payment: 5%, 10%, 15%, etc. Please find the complete list of 2023 Jumbo down payment standards here.
- Shop around to compare interest rates and fees from other brokers or lenders.
- Jumbo mortgages are those that exceed the maximum conforming loan amount set by Fannie Mae or Freddie Mac in a particular area. In West Palm Beach this means any mortgage over $726,200 is considered a Jumbo Loan.
- Jumbo programs can come with higher interest rates, but this can often be offset by doing a combo loan structure.
- Jumbo loan interest rates greatly depend on the borrower’s credit score, down payment, and other factors.
- Piggyback Loans are a combination of two mortgages that allow borrowers to avoid having to pay Private Mortgage Insurance (PMI).
By understanding these requirements, buyers will be better equipped to make informed decisions when it comes to their financing needs. To find out more about Jumbo Loans in Florida, please contact our team today by calling the number above, or submitting the Quick Contact Form on this page.