If you’re looking to buy a home, choosing the right mortgage bank can save you money. This is especially true if you plan to take out a large mortgage. Jumbo loans typically come with higher interest rates than conforming loans (although this trend has changed in the exotic mortgage loan market in 2022 and 2023). Jumbo loans also have stricter eligibility requirements, so it’s essential to compare banks and shop around for the best deal.
How We Chose the Best Jumbo Loan Lenders
To determine the best jumbo loan lenders, Bankrate evaluated lenders based on several criteria, including access to banking services; cost (competitive jumbo loan rates and low or no fees); speed (approval and closing timelines); and borrower experience (including customer support).
Guaranteed Rate
Bankrate Rating: 4.6/5
Why We Chose Guaranteed Rate:
Guaranteed Rate has been ranked as one of the top three jumbo loan lenders by Scotsman Guide and received high ratings from J.D. Power.
Loan Products:
Purchase and refinance; conventional, jumbo, FHA, VA, USDA, interest-only
Credit Requirements:
620 for conventional and FHA loans; 580 for VA loans
National Availability:
Available in all 50 states
Pros:
Smooth digital application process
Over 350 branches nationwide offering personal support
Pre-qualification in 10 to 15 minutes
Cons:
Home equity loan products are not available
Link to full review:
Guaranteed Rate Mortgage Review
Chase Home Lending
Bankrate Rating: 4.7/5
Why We Chose Chase Home Lending:
Chase Home Lending offers jumbo loans up to $3 million for qualified borrowers, but you’ll need at least a 20% down payment (possibly more).
Loan Products:
Purchase and refinance; conventional, jumbo, FHA, VA
Credit Requirements:
620 for conventional loans; 680 for jumbo loans; 640 for FHA and VA loans
National Availability:
Available nationwide
Pros:
Up to $3 million for jumbo loans
Banking customers may receive discounted pricing
$2,500 closing guarantee
Cons:
USDA loans and home equity lines of credit (HELOCs) are not available
Higher fees for jumbo loans
Link to full review:
Chase Home Lending Mortgage Review
Ally Bank
Bankrate Rating: 4.9/5
Why We Chose Ally Bank:
Ally Bank offers jumbo loans with competitive interest rates and no lender fees.
Loan Products:
Purchase and refinance; conventional, jumbo
Credit Requirements:
620 for conventional loans; 700 for jumbo loans
National Availability:
Available in all states
Pros:
Competitive rates, no lender fees
Online pre-qualification in just three minutes
Simplified digital application process with faster closing
Cons:
No branches
FHA loans, VA loans, USDA loans, and home equity loans are not available
Link to full review:
Ally Bank Mortgage Review
Wells Fargo Home Mortgage
Bankrate Rating: 4.9/5
Why We Chose Wells Fargo:
Dedicated sales teams for jumbo loans or any other type of loan serve borrowers at Wells Fargo. J.D. Power ranks this giant above average in customer satisfaction.
Loan Products:
Purchase and refinance; conventional, jumbo, FHA, VA, USDA, construction and renovation loans, investment properties
Credit Requirements:
620 for conventional loans
National Availability:
All states – but you’ll need an account with Wells Fargo
Pros:
Branches in most states
Provides a range of tools and resources online to prepare buyers for the mortgage process
Cons:
Home equity loan products are not available
Unsatisfactory online ratings from previous customers
Slowed down mortgage loan offerings in early 2023 but still offers loans to depositors
Link to full review:
Wells Fargo Home Mortgage Review
Credit Union Alliance
Bankrate Rating: 4.3/5
Why We Chose Credit Union Alliance:
Buyers can get up to $6,500 from the lender if they work with a real estate agent within the alliance network.
Loan Products:
Purchase and refinance; conventional, jumbo, HELOC
Credit Requirements:
Credit:
720 for jumbo loans
National Availability:
Available in all states
Pros:
No application fees
Customized rates available online
Cons:
FHA, VA, and USDA loans not available
Loans available only to members
Lending fees and borrower eligibility requirements not disclosed online
Link for full review:
Credit Alliance Mortgage Review
How to Find the Best Lender for Your Jumbo Loan
Before you start comparing mortgage lenders, it’s important to ensure that your financial situation and credit profile are in good shape. Regardless of what lenders offer, you will get the best loan terms if your credit score is high, your debt-to-income ratio is low, and you have a significant down payment.
While shopping around, apply with multiple lenders for quotes on interest rates and closing costs. You might even consider working with a mortgage broker who can help you with this process.
With interest rates and closing costs displayed side by side, you’ll be able to choose the best lender based on what they offer. You may also be able to use this information to negotiate with lenders to reduce their rates or costs to a more favorable level.
Take your time in this process, as even a slight reduction in the interest rate can save you tens of thousands of dollars, especially when borrowing a large sum of money.
The Next Steps to Apply for a Jumbo Mortgage
The process of applying for a jumbo mortgage is the same as applying for a conventional mortgage. Start by applying at three to five lenders that offer jumbo loans. You will need to provide documentation about your financial situation, which lenders will use to determine whether you qualify for a loan and what its terms will be.
Depending on the mortgage lender, the minimum credit score to qualify for a jumbo loan is typically 700 or higher. One major exception is the jumbo VA loan, which you might be able to obtain with a mid-600 credit score or even lower.
Along with your credit score, lenders will also review your debt-to-income ratio. It’s important for the debt-to-income ratio to be low, but this applies more so to jumbo loans, to ensure you can afford the loan. The debt-to-income ratio for conforming loans typically has a maximum of 50 percent; for jumbo mortgages, it may be lower at 38 percent to 43 percent.
Frequently Asked Questions about Jumbo Mortgages
What is a jumbo mortgage?
A jumbo mortgage is a home loan that exceeds the limits set by the FHFA on behalf of Fannie Mae and Freddie Mac, the government-backed agencies that buy most mortgages in the United States and package them for investors. For 2024, the maximum conforming loan limit in most areas is $766,550. However, the loan limits are higher, at $1,089,300, in more expensive areas. If you borrow more than those amounts, you will need a jumbo mortgage. So, if you are buying a mansion – or even a regular home in a high-priced area like Silicon Valley – you may need a jumbo mortgage.
What is the difference between jumbo loans and conventional loans?
In fact, most jumbo loans are conventional loans. A conventional loan is a mortgage that is not backed or insured by the government. However, conventional loans can be either conforming or non-conforming, and this is where the distinction lies when comparing jumbo loans to conventional loans. Conforming loans must meet the loan limits set by Fannie Mae and Freddie Mac. Historically, jumbo mortgages carry higher interest rates than conforming loans – usually by about 0.25 percent to 1 percent higher. But in 2022, that trend flipped. As of mid-2024, jumbo loan rates are nearly the same – or even lower – than the rates for conforming conventional loans.
What
What are the requirements for a jumbo mortgage?
Since you are borrowing an amount larger than what is acceptable for a conforming loan, jumbo mortgages typically have stricter eligibility requirements. For example, credit score requirements can be significantly higher, and while a 20 percent down payment is generally recommended for a conforming loan, it may be a de facto requirement to obtain a jumbo mortgage. In some cases, you may be able to secure a jumbo mortgage with a lower down payment – sometimes as low as 10 percent – but this may come with additional costs to offset mortgage insurance fees. Every mortgage lender has a different set of criteria, so it’s important to shop around and compare loan terms and eligibility requirements to find what works best for you. The limits for jumbo mortgages in 2024 vary from state to state.
Source: https://www.aol.com/best-jumbo-mortgage-lenders-2024-153228375.html
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