Best Jumbo Home Loans
If you’re in the market for a home worth $484,350 or more, you’ll probably need a “jumbo” mortgage: a special loan rate reserved for higher-priced homes and investment properties. In some of the country’s most expensive zip codes — like Seattle, San Francisco, Los Angeles, and New York — the baseline for a jumbo mortgage rate can be even higher, all the way up to $726,525. Since jumbo loans are larger than what the Federal Finance Housing Agency (FHFA) is willing to guarantee, government agencies like Fannie Mae and Freddie Mac don’t finance jumbo mortgages. Still, as the housing market continues to grow, jumbo mortgage loans are becoming more and more popular. The larger the loan, the higher the risk to lenders, so when you apply for a jumbo mortgage, you can expect tougher requirements.
|Lender||Current Rate*||Down Payment Required||Key Feature|
|Ally Mortgage||3.163%||3%||Price match guarantee|
|Citibank||Varies||3%||Fair credit options|
|Guaranteed Rate||Varies||3%||Interest-only with 15% down|
|Quicken Loans||Varies||3.5%||No prepayment penalties|
|SoFi Mortgage||4.50%||10%||No PMI required|
|SunTrust||3.625%||3%||Medical professional program|
*Based on a 30-year fixed rate $750,000 loan with good credit.
What is a Jumbo Mortgage?
A jumbo mortgage is a loan on a high-priced home or property, usually one worth more than $484,350. It’s harder to qualify for than a traditional mortgage, but since it requires stricter borrowing standards, a jumbo loan usually comes with a lower interest rate. Remember, with lending products like loans and credit cards, lower interest rates are better, because it means you’ll pay less interest over time. (Whereas with savings products like money market accounts and CDs, higher interest rates are better, since it means the bank will pay you more over time.)
Jumbo Home Loan Qualifications:
- A good credit score, preferably 700 or above
- A low debt-to-income (DTI) ratio
- A minimum 3% cash down payment, although 20% is ideal to save on private mortgage insurance (PMI)
- Six months of mortgage payments in cash reserves
Jumbo mortgages are perfect for people with high incomes without large cash savings, but a good credit score, low debt, and steady income are essential. You’ll need to provide pay stubs from the last month, two years of W-2 or 1099 tax forms, and show that you have at least six months worth of mortgage payments in savings.
Most lenders only require a 3% minimum down payment, but you’ll have to carry private mortgage insurance (PMI), which could add hundreds of dollars to your monthly mortgage payment. To save yourself the required fee, you’ll have to pay a 20% down payment on your home’s value.
Jumbo loan rates can vary wildly from one lender to another, so it pays to shop around and find the best jumbo mortgage rates.
Jumbo Mortgages vs. Regular Mortgages
The biggest difference between a regular mortgage and a jumbo loan is the price of the home. Loans over $484,350 qualify for a jumbo home loan unless you live in one of the highest property value counties in America where the baseline jumbo loan is $726,525. Since they offer better interest rates and lower down payment minimums, jumbo mortgages are harder to qualify for, and you’ll have fewer lending options.
Regular mortgages are more common and easier to get. A higher down payment is usually required for a traditional loan, versus as little as 3% for a jumbo loan. Traditional loans are often backed by the government and are more forgiving than jumbo loans. Your credit score doesn’t have to be as high to qualify for a traditional mortgage, and your debt-to-income ratio can be higher, which is good news if you’re still paying off student loans or have other kinds of debt.
The Best Jumbo Mortgage Rates of October 2019
The online bank, Ally Financial, has a team of loan experts available, as well as a suite of web-based and mobile tools to manage your loan. Ally’s jumbo loan rates start at 3.163%, which is among the best in the industry. Plus, Ally will match a competitor’s price if you send a loan estimate dated within the past five business days.
Citibank offers both traditional and jumbo mortgages. If your credit score isn’t as high as you’d like, Citibank might be a good choice because it’s willing to look at alternative metrics like your rent payment history. No sample rates are available online, so you’ll have to complete a custom quote request to compare.
Guaranteed Rate claims to “live in the culture of Yes,” but that doesn’t mean every borrower will get approved for a jumbo mortgage loan. However, if you have unique circumstances that have prevented you from attaining a stellar credit score, Guaranteed says it’s willing to listen.
Like many digital-first lending companies, Quicken Loans makes the entire mortgage application and approval process available online, without the need to visit a branch in person. Once approved, you can also make mortgage payments through its website or mobile app. While you’ll need to request a quote from Quicken to see what rate you’ll qualify for, it claims to offer jumbo mortgages at better-than-average rates, and also has a jumbo mortgage program specifically for veterans and service members.
Most jumbo mortgage lenders require a 20% down payment before waiving their private mortgage insurance (PMI) requirements, but SoFi and SunTrust are the rare exceptions that will waive it with just a 10% down payment. SoFi is also a great option for self-employed and freelance applicants, though its jumbo mortgage rates may be slightly higher than you’ll find at some of the lenders listed above.
SunTrust is a full-service bank that offers jumbo mortgages, but not in Hawaii, Alaska, Oregon, or Arizona. Its most unique drawing point is a specialized loan program for licensed medical professionals; the Doctor Loan Program for residents, interns, fellows, physicians, and dentists with high earning potential allows applicants to finance 100% of their home’s value.
What You’ll Pay
For a jumbo loan with a rate of 3.25%, the principal and interest payment would be just $435 a month for every $100,000 borrowed, or $3,482 on a $800,000 loan.
With a rate of 3.375%, your principal and interest payment would be $442 a month for every $100,000 borrowed, or $3,537 on a $800,000 loan.
You can use our mortgage calculator to determine the monthly payment for the exact amount you want to borrow with this or any home loan.
Although mortgage rates have defied all predictions and jumbo loan rates are the lowest we’ve seen this year thanks to the Federal Reserve continuing to keep interest rates low and Great Britain’s decision to exit the European Union, it’s a pretty safe bet that rates will move higher in the next few years.
When figuring out how much house you can afford, don’t forget to factor insurance, property taxes and association fees into the payment, which can really bump up your monthly housing cost.