For those who are interested in buying a high-end property in Sacramento, a jumbo loan might be the best choice. However, before diving into the world of jumbo loans, it is important to understand the basics and requirements that come with it. In this post, we will discuss all about the new Sacramento jumbo loan limits and requirements, so you can make a well-informed decision.
What is a Jumbo Loan in Sacramento?
A jumbo loan is a type of mortgage loan that exceeds the limits set by the Federal Housing Finance Agency (FHFA) for conforming loans. In other words, they are designed for more expensive, high-cost properties where the amount needed exceeds the maximum conforming loan limit. The 2024 conventional mortgage limit for Sacramento County is $766,550 for a 1-unit property. These loan limits are even greater, up to $1,149,825 for select high-cost counties in California.
Jumbo loans typically have slightly higher interest rates compared to conforming loans, and they also require higher credit scores and down payments. The current median home price in Sacramento is currently hovering around $460,000. With this, it doesn’t take much to exceed the conforming loan limit. This is especially true in more expensive locations like Downtown, Granite Bay, El Dorado Hills, Land Park, etc. where the average home price can easily exceed $1m.
Requirements for Jumbo Loans:
Jumbo loans require a higher credit score and you need to have a larger down payment compared to conforming loans. However, new options have recently emerged that permit only a 5% down payment. In Sacramento, a credit score of at least 680 or above is usually required for max 95% financing, but some mortgage companies may require a slightly higher score. Lower credit scores are often accepted for buyers with larger down payments of 10%-15% or more.
Borrowers for jumbo loans should also have a low debt-to-income ratio, usually below 45%. Additionally, some jumbo loans require reserves, which means you need to have a certain amount of money in your accounts (liquid or non-liquid) after closing.
Factors that Affect Jumbo Loan Qualifying:
Lenders and banks consider multiple factors when it comes to approving a jumbo loan. These include your credit score, income, the amount of the loan, the property type, employment history and down payment. It’s important that you have a stable income and employment history, as this plays a major factor in the lender’s decision-making process. The property type also plays a big role in determining a jumbo loan’s requirements. Single-family homes typically have lower credit score requirements, while condos, co-ops, and multi-family units have higher requirements.
California Jumbo Loan Benefits:
Despite having slightly stricter requirements, jumbo loans can be very beneficial to some borrowers. The most obvious benefit is being able to purchase a high-end property that would be impossible with a conforming loan. Jumbo loans offer higher loan amounts with competitive interest rates. As long as you meet the lender’s requirements and have a strong credit history, getting approved for a jumbo loan is a great opportunity for homeowners.
There are also different options for self-employed buyers to qualify under the Jumbo bank statement program. This special program allows self-employed business owners to qualify based on their actual bank deposit average instead of traditional tax returns.
Veterans also have expanded high-balance loan options under the VA Jumbo Loan. This is by far the best option for Vets that have remaining entitlement. The program has all the same benefits as a normal VA loan, like 100% financing up to $4m loan amounts with no monthly mortgage insurance.
Finding the Right Lender:
Jumbo loans often require working with a specialized lender who concentrates on these types of loans. It’s also important to compare rates and fees from different lenders to ensure you are getting the terms possible. Don’t be afraid to ask questions about the loan process and get all the information you need before making a decision.
Borrowers that have questions about the various purchase and refinance programs are encouraged to connect with us 7 days a week by calling the number above, or just submit the Quick Call Form on this page.