Jumbo Loans Texas

For home buyers with incomes in the $250,000 to $500,000 range, jumbo loans in Texas may be the most cost-effective route to home financing. These “jumbo” loans are “non-conforming” loans. That means that such loans do not fall within the loan limits set by Freddie Mac, Fannie May or the Federal Housing Finance Agency. Rather, these jumbo loans in Texas are available from private investors. Because such loans fall outside of the usual financing agencies and their guidelines, terms for jumbo loans in Texas are negotiated between the home-buyer and borrower and the lender. Private investors who offer these larger loans will have their own guidelines which very likely not match those of the usual lenders.

How Jumbo Loans Work

Jumbo loans in Texas and elsewhere have become very popular due to the persistence of low interest rates. Wealthy investors are looking for safe places to invest their money and a better return on investment than a CD at the bank. These loans are serviced by lenders to connect investors to buyers who can afford jumbo loans. The investors are happy with a better return on their investment and the home-buyer is pleased with a lower interest rate, a larger loan, and a tax-deductible loan because it is effectively a home mortgage. Million dollar loans are common in the world of jumbo loans in Texas and because these are private loans, there few or no government regulation or rules to contend with.

Texas Jumbo Loan Requirements and Limits

Jumbo loans in Texas start when the loan value is more than $424,100. (This amount will vary from state to state.) This route to financing a home may be just the right choice the large and expensive home of your dreams. In order for this to work for you, you will need a credit score of more than 700 as these loans do not carry mortgage insurance and are not secured by Freddie Mac or Fannie May. Also, the down payment will be a larger percentage of the purchase than with a loan from the standard lenders.

To qualify for jumbo loans in Texas you will need to provide proof of income and your assets. This will be a complete financial disclosure including the most recent thirty days of pay statements from your work as well as W2 statements for the preceding two years.

Self-employed individuals typically have a higher income requirement and will need to provide the last sixty days of bank statement as well as tax returns for the most recent two years. The point is to demonstrate sufficient cash and other liquid assets to cover payments for six months. All other loans that the person has must also be disclosed and the borrower will need to prove ownership of any real estate or other non-liquid holdings. The debt to income ratio of 45% or better is necessary to qualify for jumbo loans in Texas.

Do your research before applying for jumbo loans in Texas. Make sure that you qualify and that the tax benefits work in your favor.