topic Re: How to qualify for a jumbo loan (over $1 mil)? in Mortgage Loans

How to qualify for a jumbo loan (over $1 mil)?

Anonymous — Fri, 19 Mar 2021 05:23:36 GMT

Is there some secret recipe in order to secure a jumbo loan vs a standard FHA/conventional loan?

In general terms, how important is the credit score if it's over 740? And ideal DTI ratio?

What are lenders looking for specifically other than acceptable income (200-250k) with the assumption of a 20% down payment?

Re: How to qualify for a jumbo loan (over $1 mil)?

disdreamin — Fri, 19 Mar 2021 13:20:42 GMT

I'm very curious to see the replies on this. Frankly, I am having difficulty seeing how an income of 200-250k could be sufficient for such a loan. Perhaps it is a YEMV thing depending on taxes where the property is located?

Re: How to qualify for a jumbo loan (over $1 mil)?

iced — Fri, 19 Mar 2021 17:13:41 GMT

@Anonymous wrote:
Is there some secret recipe in order to secure a jumbo loan vs a standard FHA/conventional loan?

In general terms, how important is the credit score if it's over 740? And ideal DTI ratio?

What are lenders looking for specifically other than acceptable income (200-250k) with the assumption of a 20% down payment?

I did a $1.1 million mortgage last year. There's no secret recipe. If your income and assets support the mortgage, you'll probably get it.

As with all non-conforming, the lending standards will be more traditional and therefore stringent. I've seen one case here of a bank willing to do a 0 down jumbo, but most lenders are going to want 10 to 20% down, 1 years worth of reserves, and income stream to support the monthly payments. I think scores over 700 should be ok.

In my case, we did about 25% down (purchase price was ~$1.5 million), showed >12 months worth of reserves, and DTI was under 43% with the mortgage payment.

Re: How to qualify for a jumbo loan (over $1 mil)?

tooleman694 — Fri, 19 Mar 2021 18:29:50 GMT

Here in Seattle WA, an income of 250k could get you a mortgage of 1.9 million if the jumbo can go up that high.

Re: How to qualify for a jumbo loan (over $1 mil)?

iced — Fri, 19 Mar 2021 19:48:52 GMT

@disdreamin wrote:
I'm very curious to see the replies on this. Frankly, I am having difficulty seeing how an income of 200-250k could be sufficient for such a loan. Perhaps it is a YEMV thing depending on taxes where the property is located?

$250k for a $1 million mortgage is pretty doable, but I wouldn't suggest one above about $1.2 million or so. Even though the DTI calculation would allow for close to $2 million, people at that income who aren't also maxing out 401k, etc are doing it wrong, and getting to those levels requires making cuts to retirement savings.

Property taxes are also definitely a wildcard in the equation. If you live somewhere where property taxes are $10k per $1 million, you're going to be able to push a little closer than somewhere where taxes are $20k per $1 million. That ~$1,000/month difference is around 5% of the DTI load for a $250k income.

Re: How to qualify for a jumbo loan (over $1 mil)?

Anonymous — Fri, 19 Mar 2021 23:15:40 GMT

@tooleman694 wrote:
Here in Seattle WA, an income of 250k could get you a mortgage of 1.9 million if the jumbo can go up that high.

Here in SoCal, Orange County, more specifically anything over $822,375 is considered to be jumbo.

1.9m? I mean that is pretty high up there and with perfect DTI/Credit score and possibly a high downpayment of 20% or more?

Re: How to qualify for a jumbo loan (over $1 mil)?

Anonymous — Fri, 19 Mar 2021 23:15:59 GMT

Re: How to qualify for a jumbo loan (over $1 mil)?

Anonymous — Fri, 19 Mar 2021 23:18:50 GMT

@disdreamin wrote:
I'm very curious to see the replies on this. Frankly, I am having difficulty seeing how an income of 200-250k could be sufficient for such a loan. Perhaps it is a YEMV thing depending on taxes where the property is located?

There are many instances where I've read that even a sustainably "low" 150k income is able to get a $1m mortgage. Is it wise? I guess it depends on the finances. Income isn't the only thing that determines someone's wealth.

Re: How to qualify for a jumbo loan (over $1 mil)?

Anonymous — Fri, 19 Mar 2021 23:20:52 GMT

@iced wrote:
@Anonymous wrote:
Is there some secret recipe in order to secure a jumbo loan vs a standard FHA/conventional loan?

In general terms, how important is the credit score if it's over 740? And ideal DTI ratio?

What are lenders looking for specifically other than acceptable income (200-250k) with the assumption of a 20% down payment?
I did a $1.1 million mortgage last year. There's no secret recipe. If your income and assets support the mortgage, you'll probably get it.

As with all non-conforming, the lending standards will be more traditional and therefore stringent. I've seen one case here of a bank willing to do a 0 down jumbo, but most lenders are going to want 10 to 20% down, 1 years worth of reserves, and income stream to support the monthly payments. I think scores over 700 should be ok.

In my case, we did about 25% down (purchase price was ~$1.5 million), showed >12 months worth of reserves, and DTI was under 43% with the mortgage payment.

Was your combined income in that 200-250k range or more?

Re: How to qualify for a jumbo loan (over $1 mil)?

disdreamin — Fri, 19 Mar 2021 23:53:22 GMT

lol I think it's taxes that throw off my perception. Pretty sure where I am located you'd be talking upwards of $1k per month for taxes alone on a $1M+ property. And yes, I realize income is only one factor, but there is no way that $150K in a high tax state will allow a $1M mortgage unless you're planning on nibbling into savings/investments to pay living expenses. Makes me even more ready to move somewhere that doesn't have such high taxes

Re: How to qualify for a jumbo loan (over $1 mil)?

Anonymous — Sat, 20 Mar 2021 00:34:18 GMT

@disdreamin wrote:
lol I think it's taxes that throw off my perception. Pretty sure where I am located you'd be talking upwards of $1k per month for taxes alone on a $1M+ property. And yes, I realize income is only one factor, but there is no way that $150K in a high tax state will allow a $1M mortgage unless you're planning on nibbling into savings/investments to pay living expenses. Makes me even more ready to move somewhere that doesn't have such high taxes

Fortunately, I work for a company that does 16% DC of my salary without having me contributing a cent into my 401k. It's not common but is nice to have.

Re: How to qualify for a jumbo loan (over $1 mil)?

disdreamin — Sat, 20 Mar 2021 02:10:17 GMT

@Anonymous wrote:
@disdreamin wrote:
lol I think it's taxes that throw off my perception. Pretty sure where I am located you'd be talking upwards of $1k per month for taxes alone on a $1M+ property. And yes, I realize income is only one factor, but there is no way that $150K in a high tax state will allow a $1M mortgage unless you're planning on nibbling into savings/investments to pay living expenses. Makes me even more ready to move somewhere that doesn't have such high taxes
Fortunately, I work for a company that does 16% DC of my salary without having me contributing a cent into my 401k. It's not common but is nice to have.

My employer does 13% into my 403b without any contribution from me - it's not 16%, but it is still fairly nice. It doesn't impact what I would be able to afford housing-wise though

Re: How to qualify for a jumbo loan (over $1 mil)?

Anonymous — Sat, 20 Mar 2021 07:08:45 GMT

@disdreamin wrote:
@Anonymous wrote:
@disdreamin wrote:
lol I think it's taxes that throw off my perception. Pretty sure where I am located you'd be talking upwards of $1k per month for taxes alone on a $1M+ property. And yes, I realize income is only one factor, but there is no way that $150K in a high tax state will allow a $1M mortgage unless you're planning on nibbling into savings/investments to pay living expenses. Makes me even more ready to move somewhere that doesn't have such high taxes
Fortunately, I work for a company that does 16% DC of my salary without having me contributing a cent into my 401k. It's not common but is nice to have.
My employer does 13% into my 403b without any contribution from me - it's not 16%, but it is still fairly nice. It doesn't impact what I would be able to afford housing-wise though

Not having to contribute into a 401 helps having more cash reserve on hand. More cash on hand means larger down payment towards new mortgage. It definitely helps in the long run.

Re: How to qualify for a jumbo loan (over $1 mil)?

iced — Sat, 20 Mar 2021 11:11:14 GMT

@Anonymous wrote:
@iced wrote:
@Anonymous wrote:
Is there some secret recipe in order to secure a jumbo loan vs a standard FHA/conventional loan?

In general terms, how important is the credit score if it's over 740? And ideal DTI ratio?

What are lenders looking for specifically other than acceptable income (200-250k) with the assumption of a 20% down payment?
I did a $1.1 million mortgage last year. There's no secret recipe. If your income and assets support the mortgage, you'll probably get it.

As with all non-conforming, the lending standards will be more traditional and therefore stringent. I've seen one case here of a bank willing to do a 0 down jumbo, but most lenders are going to want 10 to 20% down, 1 years worth of reserves, and income stream to support the monthly payments. I think scores over 700 should be ok.

In my case, we did about 25% down (purchase price was ~$1.5 million), showed >12 months worth of reserves, and DTI was under 43% with the mortgage payment.
Was your combined income in that 200-250k range or more?

Around 250.

Re: How to qualify for a jumbo loan (over $1 mil)?

iced — Sat, 20 Mar 2021 11:32:03 GMT

@Anonymous wrote:
@disdreamin wrote:
@Anonymous wrote:
@disdreamin wrote:
lol I think it's taxes that throw off my perception. Pretty sure where I am located you'd be talking upwards of $1k per month for taxes alone on a $1M+ property. And yes, I realize income is only one factor, but there is no way that $150K in a high tax state will allow a $1M mortgage unless you're planning on nibbling into savings/investments to pay living expenses. Makes me even more ready to move somewhere that doesn't have such high taxes
Fortunately, I work for a company that does 16% DC of my salary without having me contributing a cent into my 401k. It's not common but is nice to have.
My employer does 13% into my 403b without any contribution from me - it's not 16%, but it is still fairly nice. It doesn't impact what I would be able to afford housing-wise though
Not having to contribute into a 401 helps having more cash reserve on hand. More cash on hand means larger down payment towards new mortgage. It definitely helps in the long run.

You really want to still be maxing out your own contributions even then if you plan to maintain standard of living in retirement. I would suggest around 30% of gross as a baseline for how much someone should be saving annually, more if possible.

We're putting around 45% of gross into savings and investments annually including match, which made our budget extremely tight (but also carrying 2 mortgages at right near 43% DTI). We dropped to around 35% for a few months, sold our previous condo, and rolled some of the proceeds into paying down the mortgage to around 750k and recast. This opened up that 8% to put back into savings, eased our budget considerably (1 less mortgage and the other dropped by 1500/month, though we are paying extra principal monthly now) and got us back under the 750k cap for tax deductions. I stress that last item: you can only deduct interest on first 750k of mortgage so if you care about recovering some of that spend you'll want to pay down to 750 or lower ASAP.

Re: How to qualify for a jumbo loan (over $1 mil)?

Anonymous — Sat, 20 Mar 2021 21:42:04 GMT

@iced wrote:
@Anonymous wrote:
@disdreamin wrote:
@Anonymous wrote:
@disdreamin wrote:
lol I think it's taxes that throw off my perception. Pretty sure where I am located you'd be talking upwards of $1k per month for taxes alone on a $1M+ property. And yes, I realize income is only one factor, but there is no way that $150K in a high tax state will allow a $1M mortgage unless you're planning on nibbling into savings/investments to pay living expenses. Makes me even more ready to move somewhere that doesn't have such high taxes
Fortunately, I work for a company that does 16% DC of my salary without having me contributing a cent into my 401k. It's not common but is nice to have.
My employer does 13% into my 403b without any contribution from me - it's not 16%, but it is still fairly nice. It doesn't impact what I would be able to afford housing-wise though
Not having to contribute into a 401 helps having more cash reserve on hand. More cash on hand means larger down payment towards new mortgage. It definitely helps in the long run.
You really want to still be maxing out your own contributions even then if you plan to maintain standard of living in retirement. I would suggest around 30% of gross as a baseline for how much someone should be saving annually, more if possible.

We're putting around 45% of gross into savings and investments annually including match, which made our budget extremely tight (but also carrying 2 mortgages at right near 43% DTI). We dropped to around 35% for a few months, sold our previous condo, and rolled some of the proceeds into paying down the mortgage to around 750k and recast. This opened up that 8% to put back into savings, eased our budget considerably (1 less mortgage and the other dropped by 1500/month, though we are paying extra principal monthly now) and got us back under the 750k cap for tax deductions. I stress that last item: you can only deduct interest on first 750k of mortgage so if you care about recovering some of that spend you'll want to pay down to 750 or lower ASAP.

Good to know. Thanks for all that info.

Re: How to qualify for a jumbo loan (over $1 mil)?

tooleman694 — Mon, 22 Mar 2021 15:08:05 GMT

@disdreamin wrote:
lol I think it's taxes that throw off my perception. Pretty sure where I am located you'd be talking upwards of $1k per month for taxes alone on a $1M+ property. And yes, I realize income is only one factor, but there is no way that $150K in a high tax state will allow a $1M mortgage unless you're planning on nibbling into savings/investments to pay living expenses. Makes me even more ready to move somewhere that doesn't have such high taxes

Here in Seattle WA, 150k income you could max out FHA or conventional. Currently it is around 770k. I personally would not go that high.

Re: How to qualify for a jumbo loan (over $1 mil)?

iced — Mon, 22 Mar 2021 20:57:44 GMT

@iced wrote:
@Anonymous wrote:
@iced wrote:
@Anonymous wrote:
Is there some secret recipe in order to secure a jumbo loan vs a standard FHA/conventional loan?

In general terms, how important is the credit score if it's over 740? And ideal DTI ratio?

What are lenders looking for specifically other than acceptable income (200-250k) with the assumption of a 20% down payment?
I did a $1.1 million mortgage last year. There's no secret recipe. If your income and assets support the mortgage, you'll probably get it.

As with all non-conforming, the lending standards will be more traditional and therefore stringent. I've seen one case here of a bank willing to do a 0 down jumbo, but most lenders are going to want 10 to 20% down, 1 years worth of reserves, and income stream to support the monthly payments. I think scores over 700 should be ok.

In my case, we did about 25% down (purchase price was ~$1.5 million), showed >12 months worth of reserves, and DTI was under 43% with the mortgage payment.
Was your combined income in that 200-250k range or more?
Around 250.

I just looked at my documents again for some tax data, and looked at the income they went with to be more accurate. The lender calculated an amount just over $261k for the mortgage application, so it was a bit over this amount but not significantly.

Re: How to qualify for a jumbo loan (over $1 mil)?

JGGM — Tue, 23 Mar 2021 11:31:01 GMT

@disdreamin wrote:
lol I think it's taxes that throw off my perception. Pretty sure where I am located you'd be talking upwards of $1k per month for taxes alone on a $1M+ property. And yes, I realize income is only one factor, but there is no way that $150K in a high tax state will allow a $1M mortgage unless you're planning on nibbling into savings/investments to pay living expenses. Makes me even more ready to move somewhere that doesn't have such high taxes

If it makes you feel better, a $400k house where I live is about $1,000/month in property taxes.