What are Denver Jumbo Loans, and Do I Qualify?
Finding the right home loan is a crucial step in the homebuying process. Not only can the proper loan help you secure the home of your dreams, but they can also save you some money on interest in the long run. During your search, you may have come across the concept of jumbo loans. If you’re planning to move to the Denver area, this type of loan could be advantageous to consider. Learn a bit more about Denver jumbo loans before applying!
What are Jumbo Loans?
First things first: what is a jumbo loan? As defined by https://www.fhfa.gov/, “A loan is considered jumbo if the amount of the mortgage exceeds loan-servicing limits set by Fannie Mae and Freddie Mac – currently $647,200 for a single-family home in all states” (except Alaska and Hawaii).
In short, a jumbo loan can help you purchase property in areas where the home prices are typically more expensive. Considering the average home price in Denver stands around $652,000, there’s a good chance that you’ll be considering a home that may require a higher amount to be borrowed and therefore the need for a jumbo loan.
Besides the amount of the loan, jumbo loans differ from other loan types in several ways. First, you’re likely to encounter a different interest rate with a jumbo loan. Some of the loan terms can be slightly different and worth paying close attention to. Additionally, applying for a jumbo loan may mean that you need to put forth a bigger down payment than you would need with a standard mortgage.
But there are also some things that jumbo loans and other loans have in common. Jumbo loans can be used for first homes, second homes, or vacation homes, just like a conventional loan. Plus, you can opt for either a fixed-rate or adjustable-rate jumbo loan in the same way you can select one of these options for a traditional loan.
Qualifying for Denver Jumbo Loans
There are several things you’ll need to ensure you can qualify for a jumbo loan to purchase your dream home. First, you’ll want to make sure your credit report is in order. The credit score needed to qualify will vary by lender, but no matter what your target score is, be sure to check your credit report and, if anything looks amiss, please feel free to contact 5280 Lend to help you determine what can be done. Credit diagnostics and credit repair are both critical parts of what we can help you with also.
Lenders will also take a look at your debt-to-income, or DTI, ratio. If you have a large amount of debt compared to the income you’re bringing in every month, you may not be approved for a jumbo loan. Your lender may also ask about any cash reserves you have, and it’s often recommended that you aim to keep 6-12 months’ worth of mortgage costs in the bank.
Finally, be sure to collect all of the documents you’ll need for your application. In many cases, you’ll need to provide at least the last two years of tax returns, a few of your recent pay stubs and bank statements, and proof of any income you may have. This income can be from a traditional job, self-employment, investment income, bonuses, or any other manner in which you might earn money.
Work with 5280Lend
While it may seem intimidating to apply for Denver jumbo loans, you don’t have to do it alone. Consider working with 5280Lend to learn more about jumbo loans and to get started applying. Our team has years of experience helping clients secure financing to purchase homes throughout the Denver area, standing out with our dedication to one-on-one attention for every client. Reach out today to get started!