When most first-time buyers look at properties, the loans they apply for are relatively small. But what happens if the property you’re looking at is one that exceeds the standard loan maximum in your area? Established or repeat homebuyers tend to use jumbo loans to get into more expensive properties. So, can you use a jumbo loan as a first-time homeowners loan? Yes, but you need to know what to expect.
Qualifications Are Tougher
Jumbo loans are used to buy high-cost properties. This means you need to make sure you have a high enough income to be able to afford the monthly payments on that property. For most lenders, the idea of using a jumbo loan as a first-time homeowner loan isn’t ideal. They want to see a long history of high income amounts and high credit scores.
The exact requirements will vary from lender to lender. But it’s a safe bet to make sure you have a credit score of 700 or higher, enough cash to cover the down payment, and additional savings to cover unexpected expenses. Keep in mind that lenders willing to issue a jumbo loan to first-time buyers may expect you to have a down payment higher than 20% of the purchase price.
You Need to Think Long and Hard About Your Loan Options
If you do qualify for a jumbo loan and want to use this loan to buy your first home, weigh the pros and cons carefully. Your mortgage payments will be very high and finding a lender willing to work with you might be harder than you expect. Further, lenders willing to issue jumbo first-time homeowners loans may charge higher fees and higher interest rates.
Make sure you’re comfortable making the payments on those loans. If you’re even remotely unsure of your financial stability, scale things back. Look for a house that’s more affordable and can be financed with a conventional mortgage. You’ll save money in the long run and can always qualify for a jumbo loan in the future.
Explore Your Options Today
If you’re considering a jumbo first-time homeowner loan, reach out to the team at Mortgage Solutions Financial. Our experienced staff will help you decide what type of loan is right for you and how much home you can afford. Remember, it’s okay to start out in a smaller home and work your way up into the home of your dreams.