When home prices rise quickly, or if you are buying a home in a very expensive area, you may need a mortgage loan that is larger than the norm.
Standard loans have a limit. The 2022 maximum loan amount for conforming mortgage loans in Pennsylvania is $647,200. If you would like to borrow more than that amount for a home purchase or refinance, then you would need a jumbo loan.
Jumbo loans can be fixed or adjustable rate, and can be for 15 or 30 year terms. The loans can be used for almost any type of residential property, from primary home to vacation home to investment property.
Because jumbo mortgage lenders will not be reimbursed by government agencies if their loans fail, the requirements are typically tougher and borrowers need higher credit scores as well as higher income in order to qualify. They also need to have a low debt-to-income ratio and have significant cash reserves to demonstrate the ability to make their payments.
The down payments on jumbo loans normally start at 10% and 20% is very common. It is possible to qualify for a jumbo loan if one of these categories is less-than-ideal, but the other categories need to be strong. If a borrower does not qualify for a jumbo loan, they may need to wait and beef up either their credit score or their down payment to be considered.
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