Jumbo Loan Qualifying in Tucson: Everything You Need To Know

In the world of home financing, Jumbo loans are designed for Tucson homebuyers and provide larger loan amounts than basic conventional loans. Median home values in Tucson are currently $325,000, so with this, a basic conventional loan will probably be sufficient for most buyers.

But for buyers in more expensive neighborhoods like Blenman Elm, Verde Catalina, or El Encanto Estates where home prices can easily exceed $1m, a Jumbo mortgage may be required. Qualifying for a jumbo mortgage has its unique set of guidelines, let’s review everything you need to know about these requirements.

What is a Jumbo Loan in Tucson?

Before we get into the details, let’s clarify what a jumbo loan is. A jumbo loan is a mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA) In most parts of the U.S., this includes all of Arizona and Pima County, the 2024 conforming loan limit for a (1) unit property is currently $766,550.

Tucson Jumbo Mortgage Down Payment:

One of the significant aspects of qualifying for a jumbo loan is the down payment. Traditionally, a 20% down payment was standard in years past. However, select lenders and banks now offer jumbo loans with down payments as low as 5% for qualified buyers. This means on a loan amount up to $1,500,000, you could potentially put down as little as $75,000 + closing costs.

Down payment amounts do vary based on the property location and loan amount. Higher loan amounts exceeding $1.5m will often require a 10% down payment.  Please see the Jumbo Purchase page for more details.

It’s essential to understand that a lower down payment means higher risk for the lender. This might come with higher interest rates or additional requirements affecting the overall cost of the loan. However, some lenders today can split up the financing into (2) separate loans commonly referred to as a combo piggyback mortgage.

Depending on the overall loan amount requested, this combo loan structure can allow borrowers to keep their first primary loan at the conforming loan limit, and take advantage of lower interest rates. A smaller second mortgage is then used to fill the gap for the remaining balance.

Doing this will also eliminate the need for PMI or monthly mortgage insurance.  Again, what loan structure works best for you will depend on many variables like overall loan amount, down payment, etc.

Jumbo Loan Documentation Requirements:

When applying for a jumbo loan, be prepared to provide extensive documentation. Lenders want to ensure that you have the financial stability to handle a large mortgage payment. Here are the key documents you’ll likely need:

1. Proof of Income: This can include W-2 statements, recent pay stubs, and tax returns for the last two years. If you’re self-employed, you may need to provide additional paperwork like profit and loss statements. *Note, self-employed buyers also have special bank statement deposit loans available. These programs allow buyers to qualify based on actual business bank deposits rather than the income tax return averages.
2. Asset Documentation: Lenders will want to see evidence of your assets. This can include bank statements, investment account statements, and any other assets that could be used to repay the loan. Generally, a 2-3 month bank statement history will be required.
3. Credit Report: A good credit score is crucial for qualifying for a jumbo loan. Most lenders prefer a credit score of 680 or higher, although some may accept a lower score with a larger down 10%-20% payment or more substantial mortgage payment reserves.
4. Debt-to-Income Ratio (DTI): This ratio compares your monthly debt payments to your gross monthly income. Many lenders prefer a DTI of 43% or less, although this can vary again based on credit profile, down payment, etc.

Lender Requirements for Jumbo Approval:

Each lender can set its criteria for jumbo loans, but there are some common requirements:

1. Strong Credit History: As mentioned earlier, a good credit score is a must. But lenders also look at your overall credit history, including if you’ve made your payments on time and how much credit you use regularly.
2. Reserves: You might need to show that you have enough cash reserves to cover your mortgage payments for a specific period. The exact amount can vary, but it’s not uncommon for lenders to require six months to a year’s worth of payment reserves. The good news is this requirement can be met with non-liquid requirements accounts like 401k, IRA, etc.
3. Appraisal: A satisfactory home appraisal will be required to ensure that the home’s value matches the loan amount.
4. Employment Verification: Most lenders will require proof of steady two-year employment or a stable income source.
5. DTI: While a debt-to-income ratio of 43% is generally acceptable, some lenders may permit higher ratios with greater down payment.

Qualifying for a jumbo loan can require stricter requirements than standard loans. However, with the right planning and preparation, the process is simple. Homebuyers that have questions, or want to learn how to get started can connect with us 7 days a week.  Just call the number above, or just submit the Quick Contact Form on this page.