A “Jumbo Loan” is one that is greater than the conventional/conforming loan limit. The rates are typically higher because these loans are not sold on the secondary market to investors and are usually retained by the originating lender. CHA Mortgage Company works with several lenders who are able to finance up to 90% (no mortgage insurance) of your home’s purchase price. The more money you put down, the better your interest rate.
Not only do Jumbo Loans require a larger downpayment, they also have stricter requirements when it comes to debt-to-income ratios and reserve requirements. Reserves are funds the lender requires you to have in savings/retirement/brokerage accounts after your loan closes. Lenders require reserves to make sure you have funds saved for emergencies. For example, if you were to lose your job you would still have reserve funds available to pay your mortgage for a period of time.
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