Do Jumbo Loan Guidelines Help Realtors?
We realize that Realtors are working harder than ever to help home buyers get their offers accepted. For many, that means looking outside the conforming loan limit and into a jumbo loan. With these loans becoming more common, it’s important to make sure you’re up to date with current guidelines and requirements.
Any mortgage over $548,250 (or $822,375 in some areas) is a jumbo loan under current guidelines from Fannie Mae and Freddie Mac.
In this competitive real estate market, it’s easy for a home to be priced above the conforming loan limit. That means more clients will need access to jumbo loans. For that to happen, certain requirements need to be met regarding credit score, savings, debt-to-income ratio, as well as loan-to-value ratio of the home.
Requirements:
- For many, the maximum loan-to-value ratio will be 80%, meaning the loan price cannot exceed 80% of the cost of the home. Another way to say this is that the buyer must be able to put down at least 20% of the home cost in their down payment.
- The minimum credit score for someone to be considered for a jumbo loan is 680. A buyer must also be able to show they have at least six months of mortgage savings reserved. While all this criterion needs to be met to qualify for a jumbo loan, it doesn’t guarantee approval from a lender.
- Debt-to-income ratio requirement is 45%, meaning the money that goes out for bills and debts monthly cannot be more than 45% of your buyer’s income.
- Individual mortgage lenders may have their own set of requirements, and the requirements also change based on properties owned, employment status, or if you’re a first-time home buyer.
- For first-time home buyers, there is a minimum credit score of 740 to be considered, a year’s worth of cash reserves needed, and a maximum debt-to-income ratio of 38%.
- For those who are self-employed, more tax documents and business filings may need to be shown than for someone with an employer.
Not all lender requirements are as strict, though. For example, at Churchill Mortgage, we may allow a loan-to-value ratio of 85%, which gives clients a bit more room to breathe on their down payment status.
It’s important to reiterate that every situation is unique, and the decision to approve a home loan is on a case-by-case basis. Your client may be approved by one company but denied by another. Helping them understand what lenders are looking for will speed along the process all the way around.
One way for your clients to stand out from the crowd, especially with a jumbo loan, is to become a Churchill Certified Home Buyer. This program positions your client almost like a cash buyer and is better than a pre-qualification or standard pre-approval. It also helps the closing process go more smoothly because underwriting has already taken the necessary steps to review the loan. In today’s market, it helps home sellers know that your clients mean business.
With many homes selling before they’re on the market and the amount of money homes are being listed for, it isn’t easy for buyers (or Realtors) to make deals happen. While a jumbo loan approval makes things easier, there are many ways you can help a buyer while they’re searching for a new home.
Helpful Hints:
- Dig into your buyers list of wants and needs in their home. Just because they want a vaulted ceiling, or a three-car garage doesn’t mean they need those things. What are your clients willing to sacrifice on their list of must-haves to get an offer accepted?
- Explore their budget. It will be beneficial for you to know not just what your clients can afford to spend, but what they feel comfortable spending. If they’re willing to spend a bit more on their mortgage, helping them find ways to cut costs in other areas of their budget will set you apart from most real estate professionals.
- Have your clients talk to a Home Loan Specialist. Oftentimes, home buyers will go to a Realtor before speaking to a mortgage company. By having clients talk to a mortgage lender first, you’ll all have a better idea of what price range to look in while home shopping.
Navigating the world of mortgages can be tricky, but it doesn’t have to be stressful. Help your clients by partnering with a mortgage company that focuses on people over profits. Churchill Mortgage exists to help home buyers achieve their dream of homeownership, and to work with real estate agents to make sure their clients are receiving the very best options available to them.
