If your real estate aspirations include a luxury residence or a home in a high-priced, competitive market, a jumbo loan (also called a jumbo mortgage) might be in your future. Unfortunately, jumbo loans often come with strict guidelines and sky-high interest rates. If only there were a way to avoid this problem…

MortgageDepot to the rescue! If you’re facing the possibility of a jumbo loan, we have ideas and resources to make the process a little more manageable. Today, we’re going to chat about how you can use a piggyback loan as a tool to avoid the hassles that sometimes accompany jumbo loans.

What Is a Jumbo Mortgage?

Jumbo mortgages are home loans that exceed the Federal Housing Finance Agency’s conforming loan limits. Therefore, these loans are not purchased, guaranteed or backed by Fannie Mae or Freddie Mac.

Jumbo loans have their place in real estate, but they can be tough to get. To qualify for a jumbo mortgage, borrowers usually need a fantastic credit score, a low debt-to-income ratio and a host of other requirements.

Next Stop: Piggyback Loans

A piggyback loan is a home equity loan or a line of credit that some borrowers obtain at the same time as their primary mortgage. Usually, borrowers take this option when they don’t have a lot of money saved for a down payment. They can use the funds from the home equity loan or HELOC to put up more money upfront, avoiding private mortgage insurance and other drawbacks of low down payments.

Using a Piggyback Loan in a Jumbo Mortgage Scenario

If the thought of a jumbo loan sends your anxiety through the roof, we might need to pull a piggyback loan out of our financial toolbox. If you qualify for a piggyback loan, you can use these funds to finance part of the down payment on your jumbo loan, potentially bringing the mortgage amount within your area’s conforming loan limits. Here are some of the benefits of going this route:

  • Conforming loans often have lower interest rates than non-conforming loans.
  • You might avoid paying mortgage insurance.
  • Conforming loans are a little more forgiving with credit scores and DTI.

Contact Us Today!

Does the thought of a jumbo mortgage intimidate you? Don’t let it! Connect with us today to learn more about your options for purchasing high-priced real estate.

Contact one of our loan consultants to learn more.

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