Jacksonville Jumbo Loan Approval in 5 Steps

Jumbo loan approval can be more difficult when compared to standard mortgages, but with the right guidance and preparation, you can make it a smooth process. This guide will go over the five key steps to successfully obtaining a jumbo loan approval in Jacksonville.

Jacksonville remains one of the fastest-growing real estate markets in the United States, with Zillow ranking it as the 10th hottest market overall in 2023. With multiple desirable neighborhoods and attractions such as beaches, live music scene, and bustling business districts, Jacksonville offers a diverse array of options for potential homebuyers.

Whether looking to buy an existing property or build a new construction home, Jax is sure to be an attractive option.

A jumbo loan is a type of mortgage designed for buyers who are looking to finance more than the conforming loan limit.  In most of Florida (Duval & St. John’s County included) the current 2024 conforming loan limit is $766,550 for a single 1-unit property. Since the median home price in Jacksonville is currently around $315,000, a standard conventional or FHA loan will be sufficient for most buyers.

But what about buyers purchasing in more expensive neighborhoods, especially those out near the beaches like Deerwood, Queens Harbour, Glen Kernan, or Ponte Vedra?  In these locations, the average home price can easily exceed $1m and jumbo financing is often needed. Jumbo mortgages are available up to $4 million+ depending on the down payment amount. They can offer competitive interest rates, making them sure to be an attractive option for those wanting to buy in these areas.

Step 1: Check Your Credit Score

The first step for any major loan is to check your credit score. A good credit score is essential for obtaining favorable terms from a jumbo lender. Keep in mind that each applicant must prove their individual ability to pass the necessary qualifications in order to be approved. Checking your score means finding out what it is and taking steps to improve it before submitting an application.  If you plan to finance the max 95% LTV, a 700 credit score will be required. Lower credit scores are permitted with a greater down payment of 10% or more.

Many times buyers can make quick and easy improvements to their credit scores. This includes paying down credit card balances and disputing any inaccuracies on their credit report. If your credit score already exceeds 740, you are already in a great position for the most favorable terms.  However, if you have a 620-670 score, some quick adjustments can go a long way. Just bumping up your score to 680-700 can go a long way and you save thousands with a lower interest rate.

Step 2: Understand Loans and Debt-to-Income Ratios

Before applying for a jumbo loan, you’ll need to understand the costs associated with taking out such a large loan. Additionally, your debt-to-income ratio must meet certain requirements, generally 45 percent or less in order to get approved. Carefully calculate monthly debt payments as well as expected monthly expenses (including taxes and insurance) when determining if you qualify financially for this type of loan.

Step 3: Gather Required Documents

Gather all required documents before submitting your application to your chosen jumbo lender. Generally, you’ll need proof of income (W2s or pay stubs), tax returns (for at least two years or more), bank statements (for at least two months or more), and valid photo identification. You should also inquire about any additional documentation that may be required by your lender before submitting your application forms.

Note: Self-employed buyers with at least a 10% down payment have bank statement qualifying programs available. Bank statement programs allow SE buyers to qualify based on their actual business bank deposits rather than tax returns.

Step 4: Choose the Right Jumbo Lender

Selecting the right jumbo lender is especially important when considering such large loans since terms can vary widely between different lenders. Do due diligence by researching reviews and getting quotes from multiple lenders prior to making your decision so that you can choose the one that best fits your financial needs and lifestyle goals.

Step 5: Acceptable Down Payment For Mortgage Company

When signing off on a jumbo loan, most lenders require at least a 10-20 percent down payment as part of their underwriting requirements. However, new low down payment options are available in Duval County with just a 5% down payment  The down payment can come from money saved or borrow funds from family members or other investments such as 401(k) accounts as part of this minimum requirement if necessary. Just be sure to check that these sources are satisfactory to your lender before proceeding forward with the application process.

As you go through the process of applying for a jumbo loan, there are several questions you should consider asking your potential lender. One of the most important factors is interest rates–make sure you ask about all applicable fees and annual percentage rates (APRs) so that you can compare offers from different lenders accurately.

Additionally, inquire about any other special conditions that may have been attached to the loan like prepayment penalties that may be associated with early repayments.

Finally, ask about their timeline for processing your loan application; this helps ensure that you won’t be left waiting too long as loan approval decisions are made. Understanding these key points during the application process will ease the stress of taking on such a large financial obligation.

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