What is the difference between conforming and jumbo loans

While it's safe to say that it's more difficult to qualify for a jumbo mortgage than a traditional mortgage, having a few missed payments on your credit history or a lower savings account balance may not automatically prevent you from getting a jumbo mortgage. Talk with a Home Lending Advisor to learn about what options you have. You can also check out our free mortgage calculator to get a better picture of jumbo mortgage payments.

Or, if you're ready to buy that dream house, you can apply for a jumbo loan today. Please review its terms, privacy and security policies to see how they apply to you.

Skip to main content Please update your browser. Please update your browser. Credit Cards. Checking Accounts. Savings Accounts. Home Equity. Invest with a J. Morgan Advisor. Online Investing with J. Chase for Business. Commercial Banking. See all. About Chase J. Jumbo vs. Qualifying for a jumbo mortgage The qualification process for a jumbo loan is similar to the conforming loan process.

Here are some of the main qualification differences between jumbo and regular mortgages. Credit score : Credit scores are proof of your past ability to make payments on-time.

You may be able to score a conventional loan with a good credit score. But you probably won't be able to get a jumbo loan with anything under excellent. It's not uncommon for jumbo loans to require a higher credit score. Reserves : Most lenders look at reserves when approving you for a jumbo loan. These reserves help safeguard lenders from defaults.

Jumbo loan limits vary by lender. But they typically go into the millions. So if you need to borrow more than local loan limits allow, you will likely need a jumbo mortgage. Technically, a conventional loan is any mortgage not backed by the federal government. Because jumbo loans are so much bigger, mortgage lenders have tougher underwriting standards for this type of loan. They want to be extra sure homeowners can afford the monthly payments.

Verify your home loan eligibility. Start here Nov 11th, That includes big cities like L. You can use our lookup tool to find the loan limit in your own ZIP code. This will tell you the maximum conforming loan limit, which is the same as the minimum jumbo loan amount. Some lenders are more comfortable lending large sums than others. Additionally, banks are more inclined to grant jumbo loans to well-qualified buyers to reduce the risk of defaulting on that loan.

However, newer homebuyers that exceed the conforming limit may be inclined to take advantage of current jumbo rates. The rate difference between jumbo and conforming loans has fluctuated over time. As a general guideline, jumbo loans tend to be associated with slightly higher mortgage rates — somewhere between 0.

However, in the past 5—7 years, the trend has been lower interest rates for jumbo loans compared to conforming loan rates. Because jumbo loans are non-conforming, banks are able to bring rates down to attract customers. In this situation, you will have a good backup in a conforming loan.

Getting approved for a jumbo loan can be challenging compared to a conforming mortgage, mostly because fewer banks offer them. Additionally, the risk is generally lower on government-approved loans because they are easier to sell on the secondary market. Scott Valins, a principal loan officer at Scott Capital Group who is licensed to originate loans in seven different states, says the jumbo loan process is unique.

It contains more of a human aspect. There are a few standard qualifications required to secure a jumbo loan, but your lender may have specific qualifying factors. These key takeaways should help guide you in the right direction:. Overall, jumbo loans are typically used by borrowers who have a robust financial sheet and are looking to make more significant purchases. The average home buyer will likely be more incentivized to stick with a conforming loan due to its less rigorous guidelines and approval process despite the slightly higher rates.

Harry R. His love for the game of baseball eventually landed him several scholarships to play college ball across the United States. After receiving his B. Soon after his move, Bennett made a career change to real estate and now works in residential sales with the Corcoran Group. In his free time, Harry can be found surfing, snowboarding, golfing, playing basketball and selling homes in Brooklyn. Conforming Loans vs. What is a nonconforming loan? Jumbo loans. Jumbo loans often have:.

A higher mortgage interest rate. Other nonconforming loans. Find conforming mortgage lenders. On a similar note Dive even deeper in Mortgages. Explore Mortgages. Get more smart money moves — straight to your inbox. Sign up.