Maximizing Your Jumbo Mortgage: Spokane Rates and Guidelines

Jumbo mortgages are loans that exceed Spokane’s conforming loan limit of $726,200.  This same limit applies to all but three counties in Washington state, please see the chart below. Qualifying for a Jumbo loan can require a little more than a conventional loan, in this post we will discuss the latest guidelines and ways to maximize your Jumbo mortgage.

For Spokane home buyers with credit scores of 680 or higher, options with as little as a 5% down payment are available. This applies to owner-occupied primary residences and loan limits of $1.5m-2m. Borrowers with 10% down have options available up to $3m.

The exact qualifying criteria may vary from lender to lender; however, there are some general requirements that must be met in order to qualify:

• A credit score of 680 or higher.
• Able to document and show a stable income stream. The borrower should produce two years’ worth of tax returns and bank statements.
• Evidence that the cash used for the down payment and closing costs is sourced from an eligible account.
• Evidence of 3-9 months of payment reserves.
• Down payment amount of at least 5%-10%, depending on the requested loan amount.
• Debt to income ratio of 45% or less.
• No mortgage late payments in recent years.

Lenders may waive some of these requirements for borrowers who can put down 15-20%, such as allowing for higher debt-to-income ratios or qualifying income based on 12 months’ bank statements – sometimes helpful for self-employed borrowers. However, the borrower will still need to show that all cash used for closing costs is sourced from an eligible account like savings, money market, or non-liquid retirement account.

When it comes to mortgage interest rates, borrowers with a higher credit score of 740+ will generally be offered lower interest rates.  A minimum credit score of 680 credit is typically required for max 95% financing.

Often times lenders will break up the financing into (2) separate loans known as a combo or “piggyback” mortgage.  This is done if the borrower needs to finance more than 80% of the purchase price.

In the case of 95% financing, the first primary loan would cover 80% of the purchase price and the second mortgage covers 15%. The remaining 5% is the buyer’s down payment. Structuring the loan this way does a few things:  First, by keeping the first mortgage at 80% loan to value, the borrower does not pay private mortgage insurance. Second, by keeping the first mortgage at or below the conforming loan limit ($726,200 for Spokane County) the buyer can take advantage of the lower conventional interest rates.

Jumbo mortgages can be a great option for those looking to purchase or refinance a home that exceeds the conforming loan limit. The requirements to qualify do vary depending on the chosen lender and the borrower’s credit score and down payment.

Regardless of your qualifications, it is important to discuss your options with multiple lenders before making a decision about which program is right for you. In doing so, you’ll be able to find out what rates are available and compare them against each other in order to make an informed decision.

Please connect with us 7 days a week with questions by calling the number above or just submit the Quick Contact Form on this page.