Conventional loan versus a jumbo loan
A conventional loan is a great option if you have a solid credit score and little debt. You can avoid PMI by paying 20% of the loan upfront, which will lower your mortgage payments. If you are unable to make a large payment upfront, conventional loans are available with a down payment as low as 3%. The maximum loan amount is $510,400 for 2020. There will probably be an increase in this amount in 2021. Credit score of at least 620 but 640 is preferred. The DTI must be no greater than 45%.
Jumbo mortgages loan amount is anything above $510,400 and are used to purchase properties with steep price tags—often those that run into the millions of dollars. One-unit primary property with a loan amount of up to $1 million, you’ll need to have a minimum median FICO® Score of 700 and a minimum down payment of 20%.
The maximum debt-to-income ratio – which compares your minimum monthly installment and revolving debt payments to monthly income – must be no higher than 43%.
The bank will also ask for reserves (money you have in the bank) anywhere from 2 months to eighteen months. They take your loan payment to determine the amount needed.
Mary (Mimi) Jones
Senior Loan Officer
Email: [email protected]