Jumbo loans are more common in areas where home prices are higher, and these types of loans make sense for more affluent buyers purchasing a home in these areas. Jumbo Loan borrowers should have good to excellent credit, high incomes, and a substantial down payment. Jumbo loans are non-conforming and apply when the home’s purchase price exceeds federal loan limits. In 2021, the federal loan limit in the Dallas-Ft. Worth area is anything above $548,250.
Pros of Jumbo Mortgages
• You are able to borrow more money to buy a home in a high-cost area
• Interest rates tend to be very competitive for this type of loan
Cons of Jumbo Mortgages
• A down payment of 10-20% is needed
• You’ll need a FICO score of 700 or higher (although, you may be able to get by with a 660)
• Your debt-to-income ratio cannot be above 45%
• You’ll need to prove that you have significant assets in cash or your savings account
