Jumbo Loans Colorado
Colorado is the perfect place for those who love an active lifestyle and plenty of space to spread out, which is why jumbo loans are a great way to afford the home you've always wanted. With a jumbo loan, you can rise above conforming loan limits to seek a luxury primary residence or investment property.
The average home in Colorado costs about $527,000, but many go for well beyond that. In areas like Lone Tree, the typical home value is well above $1 million. If your home search leads you to a beautiful, high-priced home, don’t fret — you can go above the limits set for conventional loans with a jumbo loan. District Lending is proud to offer jumbo mortgages for well-qualified homebuyers, leveraging local expertise and competitive interest rates to help you afford your dreams.
Colorado Jumbo Loan Statistics
This Rocky Mountain state is well-known for having high home prices. In Denver, 27% of homes cost more than $1 million, meaning that over a quarter of buyers need a jumbo home loan to afford property. In fact, the most expensive area in the state, Cherry Hills Village, has a typical home value of $2.86 million, 386% higher than the state average. With so many Colorado cities trending well above conforming loan limits, jumbo loans are the way to go.
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Qualifying for a Colorado Jumbo Loan
Jumbo loans tend to be rarer and more challenging to qualify for because they are riskier for the lender. Whereas conventional mortgages can be guaranteed and insured, jumbo loans cannot. This means that the lender will take on all the burden of a borrower defaulting. These non-conforming loans mean more money for borrowers, but they also mean more requirements to qualify.
Before you begin searching for loans, you’ll need solid documentation proving that you are a well-qualified borrower, including things like your banking statements, taxes, and information about the property you wish to buy. This will help lenders determine whether you have the funds to afford your chosen property. Be sure to get everything into order before you start your funding search.
Jumbo Loan Limits
The Federal Housing Finance Agency (FHFA) sets a baseline conforming loan limit, which notates which loans can be insured and guaranteed by Fannie Mae and Freddie Mac. These limits peg both FHA loan limits and define non-conforming loan limits, defining a jumbo loan. A jumbo mortgage can’t be insured or guaranteed, and it also cannot be sold on the secondary mortgage market, making it difficult for lenders to recoup losses if a borrower defaults.
Colorado conforming loan limits vary by county. More affordable Colorado counties, such as El Paso County or Mineral County, have a conforming limit of $766,550, but higher-cost counties increase the maximum limit for a single-family home purchase up to $1,149,825. This includes Garfield County and Pitkin County. As you begin your home search, we’ll provide you with information about the limits in your area so you can pick the right mortgage product for you.
Liquid Assets
More financing means more expenses, which is why lenders want to see that you have enough cash to afford your monthly payments. As such, you’re typically expected to have a 20% down payment, plus money for closing costs. Substantial cash reserves and a high gross monthly income will ensure you a seamless jumbo loan process, especially when paired with other positive indicators.
Strong Credit History
While you can be approved for conventional or VA loans with just a 620 credit score, the threshold rises when you reach the jumbo loan limit. Typically, when you need a jumbo loan, you also need a 700 or higher credit score, whereas some lenders may expect a 720. Before you seek pre-approval for a jumbo mortgage, ensure that you have low credit utilization and a solid monthly payment history.
Low Debt-to-Income Ratio
Lenders need to know that you will always have money to pay your loan amount, which is why they expect a much lower debt-to-income ratio than for a conventional loan. While you can be approved for a conforming mortgage with a DTI of 40%-50%, you will likely be denied a jumbo mortgage if you have more than a 36% DTI.
Property Appraisals
For nearly every mortgage, you’ll need a property appraisal. However, for a larger mortgage, you might have to get two appraisals. This assures Colorado jumbo loan lenders that your chosen property’s sales price actually matches the home value. You’ll also need several appraisals if you decide to refinance your jumbo loan in the future.
Colorado Jumbo Loan Total Amount and Payments
Jumbo loan rates are always higher than for those loans below the conforming loan limit because they are riskier. The interest rates you're eligible for depend on several different factors. Some are about you as a borrower, while others are about the Colorado market as a whole.
Interest Rate
Your credit score and local market conditions are the two major factors in what you can expect from an interest rate. While jumbo rates will be higher, they often track with interest rates for conventional mortgages, which are the bellwether for how the market is doing. You will also need to choose between fixed-rate and adjustable-rate mortgages. We can provide professional advice on whether a fixed-rate or adjustable-rate mortgage is right for you.
Down Payments
Down payments are much larger for jumbo home loans, as they ensure the lender will recoup some of their losses if you default. The usual down payment amount is 20%, which means that even if you take out the smallest loan above the conforming loan limit, you’ll have a down payment of over $153,000. However, unlike with a conforming loan, you will not have private mortgage insurance.
Talk With District Lending About Jumbo Mortgage Loans in Colorado
Big living in the Centennial State often requires a big mortgage to match. A jumbo loan gives you more options in this expensive state, helping you afford areas that would be out of limits with a conventional loan.
Whether you want a large vacation home in Aspen for your ski trips or a pricey property in Denver, District Lending is here to help. Our expert team of loan officers will explain the entire mortgage process to you, from pre-qualification to your down payment requirements.
Contact us today to learn more about a jumbo mortgage, as well as our many other excellent loan options that will exactly match your needs. We look forward to assisting you in affording a gorgeous Rocky Mountain property in one of America’s most exciting states.
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