Jumbo Loans Texas
Everything's bigger in Texas, and that includes the beautiful homes. A jumbo loan allows you to ride past the conforming loan limit and purchase a larger home, whether that's a primary residence or investment property. District Lending is excited to help you afford your Lone Star State dreams with a great jumbo mortgage loan.
While the median home price in Texas is a respectable $361,333, homes often sell for more than twice the list price, meaning that conventional loans below the conforming loan limit might not cut it in competitive areas. The jumbo loan limit in Texas is much higher, enabling you to stay ahead of private investors who are seeking to purchase your dream home. If you have a stable income and a higher credit score, you can aim for jumbo loans to pursue your perfect property.
Texas Jumbo Loan Statistics
While homes priced above $1 million make up about 3.6% of the total Texas market, their distribution varies — in Austin, nearly 25% of homes are listed above conforming loan limits, while in Dallas, this number is 22%. As few people can afford to purchase such pricey homes outright, this means that nearly 1 in 4 Austin residents are leveraging jumbo loans. Those seeking property in the priciest cities must look beyond traditional loans to stay ahead.
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Qualifying for a Texas Jumbo Loan
Unlike a conventional loan, lenders cannot get insurance or guarantees for mortgage loans above the conforming loan limit that is set by the Federal Housing Finance Agency (FHFA). This means that Fannie Mae and Freddie Mac won’t purchase jumbo mortgages for the secondary mortgage market, which puts the lender at financial risk if the borrower defaults.
As such, jumbo loan qualification requirements are much stricter, and jumbo loan rates are higher. Jumbo borrowers should gather all of their documentation, such as bank statements, tax returns, and debt information, in preparation to speak to a loan officer and get approval. Here’s what you’ll need to know in order to qualify for a jumbo loan.
Jumbo Loan Limits
Each year, the FHFA sets a conforming loan limit for every county in the US, which is based on the average sales price in the area. Currently, all counties in Texas have the same limit for conventional mortgages: $766,550. Anything above the conforming loan limit is considered jumbo financing and will be a greater risk for the lender.
As for Texas jumbo loan limits, you will be hard-pressed to find a lender who will let you borrow more than $3 million. The average is between $1 million and $2 million.
Liquid Assets
One of the major jumbo loan requirements is having plenty of cash reserves to back up these loan amounts. Most lenders want a higher down payment, usually 20% of jumbo loan amounts. You will need to pay for closing costs in addition to your down payment.
Lastly, and particularly for investment properties, some lenders may want to see several months of cash reserves to ensure you can make your monthly mortgage payments.
Strong Credit History
Only the most well-qualified borrowers can get these larger loans, which means they need a credit score above and beyond what would be expected for traditional mortgages. In other words, the average Texan wouldn’t be able to get a jumbo loan, as their average FICO score is 695.
While credit scores as low as 620 may be acceptable for traditional loans, most lenders want a 700 or even higher for jumbo loans. The better your credit score, the more loan options you’ll have and the better jumbo rates you can access.
Low Debt-to-Income Ratio
In addition to a good credit score, jumbo loans also necessitate consistent income and a low debt-to-income ratio. While lenders require a 40% to 50% debt-to-income ratio for conventional conforming loans, a larger loan will need a DTI of no more than 36%.
Be expected to provide in-depth information about your financial situation, including any other debts you have and what type of employment you’re in.
Property Appraisals
While conforming loans typically also require a property appraisal, a jumbo mortgage may need multiple appraisals before approval. Lenders want to see that the loan amount is in line with the actual value so that they don’t finance properties that are vastly overpriced. This is another expense for borrowers, as the average home appraisal in Texas costs between $425 and $650.
Jumbo refinance loans, such as a jumbo rate-and-term refinance or cash-out refinance, will also require several appraisals before approval.
Texas Jumbo Loan Total Amount and Payments
When you've been approved, it's time to turn your attention to jumbo loan mortgage rates and down payments. These will vary based on your personal financial profile and the current jumbo mortgage market.
Interest Rate
Jumbo loan interest rates are higher because they are riskier for the lender. Several factors will influence the interest rates you can get:
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Your borrower profile
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The current Texas jumbo loan market
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The loan amount
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The term length
In addition to exploring your rate options, you will also need to decide between a fixed-rate and an adjustable-rate jumbo loan. Your loan officer can talk you through your options and help you decide which is right for you.
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Down Payments
Jumbo loans typically have a lower loan-to-value ratio so as to better protect the lender. Whereas you might be able to get a 90% or even 95% LTV on a conforming mortgage loan, jumbo loan lenders typically want an 80% LTV. This means that you’ll have a 20% down payment on your jumbo mortgage. Even at the bare minimum, this may be over $153,000.
On the plus side, providing a 20% down payment eliminates the need for private mortgage insurance, which will reduce your monthly mortgage payments.
Talk With District Lending About Jumbo Mortgage Loans in Texas
For those who don’t want to be stifled by conforming loan limits, jumbo loans are a great option. They allow you the freedom to purchase a luxury single-family home or investment home that will provide you plenty of room to stretch out under the open Texas skies.
District Lending offers jumbo loans with great rates and customized service, so you’ll feel supported throughout the entire process. Contact us today — we’re happy to discuss all facets of jumbo loans, such as the typical loan amount, closing costs, down payments, and financial qualifications.
Whether you want a laid-back ranch life or to live right downtown in dazzling Dallas, District Lending is here to meet all of your jumbo loan needs. We look forward to assisting you in securing the perfect jumbo loans for your lifestyle and budget.
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