October 2, 2022
What is Jumbo loan in Texas

What is Jumbo loan in Texas

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What is Jumbo loan in Texas 2022? A jumbo loan is a conventional (non-government-insured) mortgage loan that exceeds the borrowing limits set by Fannie Mae and Freddie Mac, the two government-sponsored corporations (GSEs) that purchase and securitize mortgages.

Jumbo loans generally have stricter underwriting guidelines because they are not backed by Fannie Mae or Freddie Mac, but are instead held or securitized by major banks or private funds.

The stricter guidelines include stricter debt ratio requirements, larger down payment, and reserve requirements, and stricter credit standards.

In some states, the jumbo loan limit may vary by province. However, for all Texas counties, the conforming loan limit is $647,200. Any loan amount over $647,200 is considered a jumbo loan.

What is Jumbo loan in Texas?

A Texas Jumbo loan is a loan that exceeds the maximum loan amounts of a conventional loan, based on the loan limits of Fannie Mae and Freddie Mac. The rates for Jumbo loans are generally higher than conforming loans. Jumbo home loans are usually used to buy more expensive homes and high-end custom homes. They also require a higher down payment than traditional loans. As of January 1, 2022, the conforming loan limits will increase. Anything above the compliant loan limit is classified as a Jumbo Mortgage.

What Amount Is Considered A Jumbo Loan In Texas?

$647,200

Any loan amount above the Texas loan limit is considered a jumbo mortgage.

A jumbo mortgage loan is a mortgage loan whose amount exceeds the limit set by Fannie Mae and Freddie Mac. In Texas, that limit is set at $647,200. If you take out a home loan that is higher than that, there is a jumbo mortgage.

In general, the mortgage eligibility criteria are much stricter for jumbo loans simply because of the higher risk associated with the larger loan amount. Borrowers looking for homes that require larger mortgages should have good credit, stable income, adequate reserves, and manageable debt.

What Is The Texas Jumbo Loan Limit 2022?

As of January 1, 2022, the breakdown of the Texas Jumbo loan limit 2022 is as follows according to the Federal Housing Finance Agency (FHFA):

  • 2,916 counties remain at $647,200;
  • 108 counties have loan limits of $679,650 for single-unit homes. These counties are considered the areas with the highest real estate costs. They include New York City, San Francisco, and Los Angeles;
  • 115 counties are between $679,650 and $1,019,475. These areas are considered to have higher prices than normal, but not as high as the provinces mentioned above. The maximum loan amount for properties NOT located in Alaska, Hawaii, Guan, and the US Virgin Islands is $679,650 as of January 1, 2022. However, for properties in Alaska, Hawaii, Guam, and the US Virgin Islands, the new loan limit is $1,019,475.

How Jumbo Loans Are Related to Home Prices

Jumbo loans are mainly used by those who buy high-end or luxury properties. By design, conforming loan limits are generally set higher than the median home price within a given county. In theory, this gives home buyers many properties to choose from without needing a jumbo loan.

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In Travis County, Texas, for example, the median home value was about $602,231 in December 2021, according to Zillow. The county-compliant loan limit is currently $647,200. That is well above the average home value in the area.

How to Qualify for a Texas Jumbo Loan?

Before applying for a Jumbo loan, take the following steps to ensure that lenders see you as an ideal borrower. These are the jumbo loan qualification requirements for 2022.

1. Increase your Jumbo Credit Score

The loans require you to have a higher credit score than traditional loans. Work on your credit and make sure your score is at least 720 before signing up. Your lender will prepare a credit report when you meet him.

2. Pay off your debt

When you apply for a jumbo loan, your lender takes your debt-to-income ratio into account. If you have too much debt, you may not qualify for a jumbo loan. Most lenders are willing to provide loans to borrowers with a debt-to-income ratio of less than 45%.

3. Save some money

You will need enough cash to cover your down payment when you apply for a jumbo loan. Many lenders will also want you to have at least a year’s worth of mortgage payments in your bank. Having enough cash on hand will show lenders that you have a low risk of defaulting on your mortgage.

4. Collect Documents

When preparing to buy a house in Texas and apply for a loan, you will be asked to provide a large amount of documentation. Tax returns, bank statements, investment account information, and pay stubs are just some of the things you need to provide.

Keep all these documents in a neat folder and hand them over to your lender without any problems. They are more likely to partner with borrowers who seem prepared and organized.

Your house may have to be appraised twice when you get a jumbo loan.

What Are The Types Of Jumbo Loans Refinancing In Texas?

Jumbo Term & Rate Refinance –

To refinance a Jumbo Term & Rate: (a) converts a floating rate mortgage (ARM) to a fixed rate or (b) lowers the current interest rate resulting in lower monthly payments and lifetime savings of the loan

Jumbo Home Equity Refinance:

Allows the borrower to get a new jumbo loan for more than the current amount and have the difference paid to the borrower at closing. The borrower who takes advantage of the equity jumbo refinancing can use the extra money to improve the home, consolidate debt, or invest the capital gained in other investment vehicles.

Personalized Line of Credit –

Like Jumbo Home Equity refinancing, refinancing from a Jumbo Loan to a Personalized Line of Credit is used to pay for other major expenses. The borrower can use the line of credit to pay college tuition, pay medical bills, make home improvements, or use the money for other investments.

What are the requirements for jumbo loans in Texas?

Here are the requirements for jumbo loans in Texas: The credit score requirement is usually higher; A minimum median credit score is required of 680. The typical Jumbo Mortgage Borrower has a median FICO score of 740 or higher. It is not uncommon for lenders to see a borrower’s credit score in the upper 700 to the low and mid 800 when making a Jumbo loan.

What are the interest rates on jumbo loans in Texas?

Interest rates are typically higher on Jumbo loans compared to conforming loans. They are usually available in various forms such as fixed rate loan options and ARM loan options. There are also interest-only loans (HELOC or HELOAN) or temporary purchases. Interest-only option loans (HELOCs or HELOANs) do not allow a borrower to build up principal through interest-only monthly payments.

To build capital, a borrower must make voluntary principal payments during the interest period only when payments have been made. The line of credit (HELOC or HELOAN) has a variable interest rate (ARM) that can increase or decrease the monthly payment if the interest rate fluctuates. The borrower can convert part or all of the outstanding line of credit into a fixed interest rate that is amortized over a term of 5 to 20 years.

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Jumbo Loan Loan-to-Value Ratio in Texas

There is also the loan-to-value requirement. This is usually discussed on an individual basis as a Jumbo loan borrower’s situation differs from borrower to borrower. A Jumbo Loan borrower is at least obliged to make a down payment of 10%, but more often 20% is needed to qualify for a Jumbo Purchase Loan. However, some borrowers are required to make a 25% to 30% down payment depending on their situation, credit score, DTI, and the type of property being purchased.

5 Top Texas Jumbo Loan Lenders

If you’re ready to review the best jumbo loan lenders in Texas, here are a few options to consider.

1. Regions Bank

Regions Bank is based in Alabama but operates in 16 states across the country and is on the Fortune 500 list. Founded in 1971, the bank offers a full range of financial products, including jumbo loans.

We contacted Regions Bank for more information on the jumbo mortgage. Here are some key terms and highlights:

  • Fixed and floating rate mortgages are available
  • ARM loans are typically fixed for 3-5 years and then adjusted annually
  • Lower down payment requirements or lower closing costs available for first-time home buyers
  • When you’re ready to connect with a loan officer experienced in jumbo mortgages, use our form to quickly find jumbo loan programs based on your specific circumstances.

2. KeyBank

Keybank has over $170 billion in assets and is the 24th largest bank in the United States. They operate in 39 states but can provide mortgages in nearly all 50, making them a popular choice for borrowers across the country. One of the most important financial products is a jumbo mortgage loan.

We contacted Keybank to learn more about their jumbo mortgage interest rates and here are the key terms and highlights:

SilverKey Mortgage

  • Loans up to $3.5 million
  • 10% off up to $1.5 million
  • Fixed or variable rates are available
  • No private mortgage insurance is required, resulting in lower mortgage payments
  • Available for properties with 1 to 4 units, including single-family homes, condominiums, or planned unit developments.

GoldKey Mortgage

  • Loans up to $3.5 million
  • 10% off up to $1.5 million
  • Fixed or variable rates are available
  • Private mortgage insurance is not required
  • Available for properties with 1 to 4 units, including single-family homes, condominiums, or planned unit developments.
  • Available for second homes and investment properties.

Interest Only Jumbo Mortgages

  • Loans up to $3.5 million
  • 30% off mortgages up to $1.5 million for primary residences
  • 35% off mortgages up to $2 million for second homes
  • Private mortgage insurance is not required
  • ARM options only

3. BMO Harris Bank

BMO Harris Bank is an established player in the mortgage industry, ranking 16th in total assets in the country. The bank offers a complete package of financial products, including jumbo loans.

We spoke to a loan officer at BMO Harris for additional information on jumbo loan options, many of which are unpublished. Here are some key terms and highlights:

  • 10% up to $1 million (740+ credit score)
  • 15% up to $1.5 million (720+ credit score)
  • 20% up to $2 million (700+ credit score)
  • 25% up to $3 million (700+ credit score)
  • 30% up to $5 million (700+ credit score)
  • 45% less than $5 million (700+ credit score)
  • 30/20/15/10 fixed year
  • 5/6, 7/6 and 10/6 ARMEN
  • All 50 states
  • 12 months reserve

4. SoFi

SoFi is a California-based financial institution specializing in student loan refinancing options, PLUS loans, and flexible repayment terms. You may not know that they also offer jumbo loan mortgages.

We spoke to a SoFi loan officer to discuss their jumbo loan rates and here’s what we learned:

  • Loans up to $3 million
  • Deposits start at 10% and increase as the loan amount increases.
  • No PMI regardless of your down payment, resulting in lower monthly payments.
  • Available products with a fixed rate of 15 or 30 years
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5. Flagstar Bank

Flagstar Bank has a jumbo product in all 50 states, making it a popular choice with many people looking for higher mortgage amounts. If you are considering a jumbo mortgage, you should compare Flagstar’s rates as part of your analysis.

We contacted a Flagstar Bank loan officer to learn more about their jumbo rates. Here are the highlights:

  • Loan Amounts Up To $3 Million On Principal Homes
  • The loan is $2.5 million in second homes
  • Purchase and interest/term refinancing options available on primary and second homes
  • No prepayment penalties
  • First-time home buyers allowed
  • No mortgage insurance is available
  • Retirement options available in a primary residence

How Jumbo Loans Differ From Other Loans In Texas

Texans who buy homes are forced to spend more money to buy a new, luxury home or look for a cheaper one. Jumbo loans give you a different view of financing a home. How? With their higher loan limits, they offer you a way to buy more homes without having to take out multiple loans.

Take the example of a Texan looking to buy a house for over $800,000 in a great Austin neighborhood with good schools. The only option with a conventional loan would be to take out two or more mortgages. An alternative would be to make a down payment large enough to bring the mortgage below the compliant limit in Texas. That’s a lot of money to have upfront, prompting many in Texas to switch to jumbo loans.

Does a Texas Jumbo Loan Make Sense for You?

You are much more likely to qualify for a Texas jumbo loan if you have an excellent credit score. That’s because they expose lenders to more risk. These loans have stricter requirements, which means that the approval and acceptance process takes longer. If you have an excellent credit score and agree to a longer approval process, a Texas jumbo loan makes sense.

These loans also make sense for those who don’t want the hassle of taking out and keeping more than one mortgage. While the approval process can get granular with a jumbo loan, it can still be easier than going through multiple mortgage approval processes at once.

Keep in mind that compliant loan limits are set by the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, the two government-sponsored mortgage lenders that purchase and purchase most US-made mortgage lenders to resell them to private investors.

Conclusion – What Is Jumbo Loan In Texas 2022?

A jumbo loan is a type of mortgage used to finance properties that exceed the price limit of a conventional conforming loan.

While traditional loans top out at $647,200, jumbo loans have higher limits to help borrowers obtain financing for homes that are outside the maximum limit for their area.

In Houston, the limit for conforming loans is $647,200. A Houston jumbo loan allows you to borrow more than the compliant loan limit so that you can buy your home. Jumbo loan limits in Texas are much higher than traditional loan limits.

Jumbo loans are a good mortgage option for buyers who cannot get financing through a conventional loan. If you need a Texas mortgage, you should know before applying for a Texas Jumbo home loan.