Best Jumbo Mortgage Lenders in 2021
If you are looking to buy a home, choosing the right mortgage lender can save you money. This is especially true if you plan to take a larger jumbo loan. Jumbo mortgages usually come with a interest rate than compliant loans, and also have more stringent eligibility requirements, so it’s crucial to compare lenders and shop around for the best deal.
To help you get started on your search, here’s our guide to the best jumbo mortgage lenders in 2021.
To determine the best jumbo mortgage lenders, Bankrate evaluated lenders based on several criteria, including accessibility; cost (competitive jumbo loan rates and low or no fees); and timeliness (approval and closing times).
The best jumbo mortgage lenders
Better.com is a fully digital mortgage lender that offers jumbo loans and several other mortgage products in 43 states and Washington, DC. The lender can get you pre-approved in just three minutes and close a loan in as little as 21 days. For comparison, the average time to close a purchase loan is 57 days as of January 2021, according to ICE Mortgage Technology.
Better.com also doesn’t charge the lender any fees or commissions, which can save you $ 3,500 on average, depending on the lender. Also, if you get a better offer from another lender, you can send the loan estimate to Better.com, and it will match that offer and give you $ 100 – or, if it can’t match, you will give $ 100 anyway.
However, the lender does not offer VA or USDA loans, so if this is the type of jumbo loan you are looking for, you will have to look elsewhere. Additionally, Better.com does not disclose its jumbo loan eligibility requirements on its website, so you will need to apply to find out if you qualify.
LowRates.com offers jumbo loans in 48 states (not Georgia or Massachusetts) and Puerto Rico. The lender offers a long list of loan options, so you will have some flexibility if you need it. Like other lenders, LowRates.com offers quick closes, with the option to close within 20 days.
The lender requires a minimum credit score of 700 to qualify for a jumbo loan, which is the industry standard. The maximum debt-to-income ratio (DTI) required is 43%, which can be more restrictive compared to other types of loans and lenders.
LowRates.com has branches in 16 states where you can apply in person, and it also allows you to apply by phone.
Federal Navy Credit Union
The Navy Federal Credit Union primarily serves the military community, so it can be difficult to join and access its many banking and lending services, which include jumbo loans.
Having said that, if you are eligible to become a member, the credit union is worth it. On the one hand, Navy Federal Credit Union offers a generous rate match guarantee: If you lock in your rate with the credit union and then provide a better offer from another lender within three days, the credit union. credit will match the offer or give you $ 1,000 once you close your loan with the competitor. Plus, if interest rates drop within 60 days of locking in yours, you can relock your rate up to two times for free.
According to the credit union, it typically takes 30 days to close after you’ve submitted all of your documents. Navy Federal Credit Union does not provide advance information on what you need to be eligible for a jumbo loan, but the lender advertises a competitive 30-year jumbo loan rate (as of March 3, 2021), it could so be wise to explore if you qualify.
Another potential downside is that the lender does not offer FHA or USDA loans.
Another online mortgage lender, Rocket Mortgage, offers loans in all 50 states and Washington, DC, making them the most accessible lender on this list.
Although Rocket Mortgage does not specifically publish its credit score requirements for a jumbo loan, it recommends having a score between 700 and 740, depending on the size of the loan. Its DTI ratio requirements range from 38 percent to 43 percent.
It can take 30-45 days to close, which is longer, but still better than average.
Unlike the other lenders on this list, Rocket Mortgage does not offer a rate match guarantee, and you also will not get a discount on lender fees. However, if you live in one of the states where our other top jumbo mortgage lenders don’t do business, this can be a great option to consider.
Jumbo loan vs conventional loan
A conventional loan is a mortgage that is neither guaranteed nor insured by the government. As such, most jumbo loans are conventional loans.
However, conventional loans can be compliant or non-compliant, this is where the difference lies when comparing jumbo loans to conventional loans. Compliant loans are required to respect loan limits fixed by Fannie Mae and Freddie Mac. For most of the United States in 2021, that limit is $ 548,250, but if you live in a high-cost area, it drops to $ 822,375. Non-conforming loans (jumbo loans) exceed these limits.
Jumbo loans also typically charge higher interest rates than compliant loans, typically 0.25% to 1% higher.
What are the conditions for a jumbo loan?
Since you are borrowing more than what is acceptable for a compliant loan, jumbo loans usually have more stringent eligibility requirements. For example, credit score requirements can be much higher, and while a 20% down payment is often recommended for a compliant loan, it can actually be a requirement for a jumbo loan.
In some cases, you might be able to get a jumbo loan with a lower down payment – sometimes 10% – but that might come with additional mortgage insurance premium charges to compensate.
Each mortgage lender has a different set of criteria, so it is important to shop and compare loan terms and the eligibility requirements to find the one that’s right for you.
What is the minimum credit score for a jumbo loan?
It depends on the mortgage lender, but the minimum credit score for a jumbo loan is usually 700 or higher. One major exception is a VA jumbo loan, which you may be able to get with a credit score in the middle or even at the bottom of 600.
In addition to your credit score, lenders will also look at your DTI ratio. It is important to have a low DTI ratio, but even more so for a jumbo loan, in order to ensure your repayment capacity. The DTI ratio for compliant loans is usually 50% at most, but for a jumbo loan it can range from 38% to 43%.
How to choose the best jumbo lender
Before you start comparing mortgage lenders, it’s important to make sure your finances and credit history are in order. Regardless of what lenders have to offer, you will get the best loan deal if your credit score is high, your DTI ratio is low, and you have a large down payment.
When shopping, be sure to apply to multiple jumbo lenders for quotes on interest rates and closing costs. You might even consider working with a mortgage broker who can help you in this process.
With the rates and closing costs presented side by side, you will be able to choose the best lender based on what they have to offer. You can also use this information to negotiate with lenders to reduce their rates or costs to a more favorable level.
Take your time with this process, because even a small drop in your interest rate could save you tens of thousands of dollars, especially when you borrow such a large amount of money.
How to apply for a jumbo loan
The process for applying for a jumbo loan is the same as for a traditional mortgage. Start by submitting applications to at least three to five lenders who offer jumbo loans. You will need to submit documents about your financial situation, which lenders will then use to determine if you qualify for a loan and what the terms will be.