If you want an extra-large home that requires a jumbo mortgage, then be prepared to have top-notch credit and substantial savings.
Take VO: If you live on the West Coast or in the Northeast, where high home prices mean the majority of borrowers require extra-big home loans – you're going to need a jumbo mortgage.
But, you might be asking yourself how a jumbo mortgage is different from a regular conforming mortgage.
Well, for starters the term JUMBO is used to describe a loan higher than $417,000 in the majority of U.S. housing markets. This simply means the home you want to buy is over-the-limit of what Fannie Mae or Freddie Mac will guarantee or purchase from banks.
As we mentioned before – $417,000 doesn't buy you much in pricey areas of the country like California and New York. So, the limit for a jumbo loan is nearly $730,000 in high-cost housing markets.
If you want that high-end home, be prepared to drop some significant dough on a down payment. Increasingly, 25% to 30% of the purchase price is required – not the standard 20% that borrowers may be accustomed to.
Take SOT: Greg McBride, senior financial analyst – Bankrate.com
"Jumbo mortgage rates are at record lows and more lenders are getting into the market, targeting the higher-end home buyer that is such a coveted customer."
Continue VO: These customers are coveted because they tend to have higher incomes, strong credit, and by virtue of the large down payment have a lot of skin in the game and pose a much lower risk of default.
STAND-UP TAG: While you may qualify for a jumbo mortgage, it pays to shop around to find the right lender and get the best rate possible. You can search and compare lenders and rates by using Bankrate.com's free mortgage search engine. For Bankrate.com, I'm Kristin Arnold.