Today in this article, What is a Jumbo Loan in Florida? will talk about which will help you a lot: Are you planning to buy a home in Florida this year? If so, you may be wondering what a jumbo loan is and whether it is right for you. Whether you have your eye on a waterfront condo in Miami or a luxurious home in Tampa, join us as we delve into the intricacies of jumbo loans in Florida in 2023.
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What is a Jumbo Loan in Florida?
Simply put, a jumbo loan is a type of mortgage loan that is used for loans that exceed the corresponding loan limits. In the United States (U.S), the Federal Housing Finance Agency (FHFA) sets loan limits for conforming loans each year.
If the home you are buying will require you to borrow more than the Conforming Loan Limit (CLL), you will need to apply for a jumbo loan. But because of the larger loan amount and the increased risk to lenders, Florida jumbo loans often come with higher interest rates and stricter requirements than conventional loans. For example, qualifying for a jumbo loan may require a larger down payment and a higher credit score.
What is the jumbo loan limit in Florida?
In 2023, the conforming loan limit for most United States real estate markets is $726,200. However, the limits on jumbo loans in Florida depend on which county you plan to buy a home in.
- Most Florida counties have a $726,200 conforming loan limit.
- $874,000 cap in high cost countries
As a reminder, it’s the amount borrowed, not the value of the home, that determines whether you’ll need a jumbo loan. So, if you were to put $100,000 down on a $780,000 home in Palm Beach County, the mortgage would be $680,000, which is under the CLL for the area. In this case, your loan will not be considered as a jumbo loan.
The following counties in Florida have conforming loan limits greater than $726,200 for 2023:
| FHFA Conforming Loan Limit | County |
| $874,000 | Monroe |
Additional information about friendly loan limits in Florida can be found here.
What are the requirements for a jumbo loan in Florida?
As mentioned earlier, the requirements for jumbo loans are much more stringent than those of conforming loans. Each lender may have different requirements or processes, but below are the specific requirements for jumbo loan borrowers.
High Credit Score: When it comes to getting a jumbo loan, the credit score requirements are usually more stringent than for a traditional mortgage. While some lender’s may be willing to accept a lower score, a credit score of at least 720 is generally required to qualify for a jumbo loan. It is important to have a strong credit profile and a solid financial history to increase your chances of getting approved for a jumbo mortgage.
Large down payment: When applying for a jumbo loan, keep in mind that the down payment requirements are usually more substantial than those of a conventional mortgage. While the specific amount will depend on the financial situation of the lender and borrower, many jumbo loan lenders require a down payment of at least 10%, and some require 20% or more.
More Assets: During the asset review process, lenders typically request that jumbo loan borrowers provide sufficient liquid assets or proof of savings to cover the equivalent of one year’s loan payments.
Low debt-to-income ratio (DTI): Whether you are applying for a conventional mortgage or a jumbo loan in Florida, the lender will analyze your debt-to-income ratio (DTI) to determine your spending habits and creditworthiness. Let’s evaluate. DTI is determined by dividing your total monthly loan payment by your gross monthly income. While some lenders may accept a DTI of up to 50% for a conforming loan, those applying for a jumbo loan should aim for a DTI of less than 43% and ideally closer to 36%.
Additional Home Appraisal: For jumbo loans, lenders may require a second home appraisal to ensure that the property is valued correctly. This is especially true in places where there are few comparable home sales. The additional appraisal serves as a second opinion and helps the lender reduce their risk. It’s important to note that the cost of a second appraisal can be higher than a typical home appraisal, especially in low-sale areas.
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