The jumbo mortgage is back

David Weinberg Jan 4, 2013
HTML EMBED:
COPY

The jumbo mortgage is back

David Weinberg Jan 4, 2013
HTML EMBED:
COPY

As the housing market picks up and banks are increasingly willing to lend, more homebuyers are applying for mortgages. That includes jumbo mortgages — loans above $625,000 in expensive markets like the Bay Area and New York. These loans are too big to be backed by Fannie and Freddie. But to get a jumbo loan you’re going to need some very good credit.

Let’s say, for example, you want to buy a million dollar home — not extravagant in a region like Silicon Valley — but you don’t have all that money lying around. You’re going to need a jumbo loan. To qualify, you will probably have to put down a down payment of at least 30 percent, and then there’s your credit score.

“You’re looking at credit scores above 750, some lenders have an 800 credit score minimum” says Guy Cecala, publisher of the trade journal Inside Mortgage Finance. Despite the tight credit market and high lending standards, Cecala says there has been a noticeable surge in jumbo lending.

“In fact, 2012 was the highest level in terms of dollar amount of jumbo loans and probably number of jumbo loans since 2007,” he says.

Greg McBride, a senior financial analyst at Bankrate, says banks generally tend to view jumbo mortgage borrowers as “a very desirable customer because they’re often interested in other products and services offered by the bank.”

Services like retirement and investment accounts — and those borrowers tend to have money to spend.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.