Essential Mortgage

BUYING A HIGHER-PRICED HOME IN Louisiana? A JUMBO LOAN CAN HELP

If you’re considering buying a home priced over $548,250, then a jumbo mortgage loan might be your best option. These loans are specifically designed for higher-priced home purchases that go above the limits of conventional and FHA loans.

Here at Essential Mortgage, we’re proud to offer jumbo loans. These specialty home loans aren’t offered by all mortgage companies, but they’re an important financial option for higher-income homebuyers and those shopping in more expensive communities.

If you’re considering using a jumbo loan for your Louisiana home purchase, read more below or reach out to Essential Mortgage today. We’re here to help.

WHAT ARE JUMBO LOANS?

Jumbo loans are mortgages that go above what is called the “conforming limit” — or the limit set by Fannie Mae and Freddie Mac on conventional mortgages. Because they don’t have the added insurance of Freddie, Fannie or FHA backing, they’re considered a risky loan by most mortgage lenders. This often means they require a bigger down payment and higher credit score in order to qualify.

As with other types of mortgages, jumbo loans come in both fixed-rate and adjustable-rate options, as well as various term lengths. The Essential Mortgage team can help you narrow in on the jumbo loan that’s best-suited for your home purchase.

QUALIFYING FOR JUMBO LOANS

In order to be eligible for a jumbo loan, you’ll typically need a credit score of at least 700, though the exact score varies from mortgage company to mortgage company. You’ll also need a lower debt-to-income ratio than is allowed on other loan options and more cash reserves.

All in all, you’ll need:

  • At least a 20 percent down payment (sometimes more)
  • A 700 credit score or higher
  • A back-end debt-to-income ratio of 45 percent or less
  • A front-end debt-to-income ratio of 38 percent or less
  • Solid cash reserves to cover your expected mortgage payments


In some cases, mortgage lenders require multiple appraisals on jumbo loans to ensure the home is worth what you’re offering. This may require two appraisal fees at closing.

ADVANTAGES & DISADVANTAGES OF JUMBO LOANS

It’s important to understand the pros and cons of jumbo loans before using one on your Louisiana home purchase. On the upside, jumbo loans help you purchase higher-priced properties, where conventional loans and FHA loans cannot. They’re also flexible, available in both adjustable- and fixed-rate options of various lengths.

There are drawbacks, though. For one, jumbo loans can only be used on primary residences. You can’t use them to vacation homes or investment properties. On top of this, they also require higher credit scores and down payments than other types of mortgage loans.

Advantages of jumbo loans:

  • High loan balances
  • Available in various terms
  • Available with fixed or adjustable interest rates


Disadvantages of jumbo loans:

  • Can only be used on primary residences
  • Have more stringent credit score requirements
  • Require higher down payments

SHOULD YOU USE A JUMBO LOAN FOR YOUR HOME PURCHASE?

Generally, jumbo loans are a good choice if you’re a high-income earner, have good credit and have a decent amount saved up for your down payment. Remember, these are not loans to be used on investment properties, so you’ll need to be buying a primary residence to use a jumbo loan — not a second home or property you intend to rent out.

Not sure if a jumbo loan is the right move for your Louisiana home purchase? Then reach out to Essential Mortgage. Our Louisiana lending company can help you find the best mortgage loan option for your specific homebuying goals.