When it comes to buying a home, buyers can have difficulty finding financing beyond conforming loan limits. If this is the case, you may need a jumbo loan. Are you eyeing a new build home in overland park or a home in wichitaLet’s take a look at what a jumbo loan is in Kansas, the 2023 compliant loan limits, and what is needed to qualify for this type of loan.
What is Jumbo Loan?
So what are jumbo loans in Kansas? Those are large loans that exceed the loan limits set by the FHFA for conforming loans. jumbo loan Allow borrowers to finance homes that exceed the conforming loan limit, making it possible to purchase high-end properties that might not otherwise be affordable.
If you find yourself in a situation where you need to borrow more than the Conforming Loan Limit (CLL) for the home you want to buy, you will need to take a jumbo loan. Keep in mind, however, that jumbo loans come with higher interest rates and stricter requirements than conventional loans because of the larger loan amount and the risk associated with them. For example, qualifying for a jumbo loan in Kansas may require a larger down payment and higher credit score.
What is the jumbo loan limit in Kansas?
In Kansas, the corresponding loan limit is $726,200 in all counties. For example, if you are buying home in johnson countyWhere the average sale price is $450,000, loan limits in excess of $726,200 will be considered jumbo loans.
Keep in mind that the amount borrowed determines whether you’ll need a jumbo loan, not the price of the home. So, if you have to reduce $100,000 on $780,000 home in olathe, the loan would be $680,000, which is under the corresponding loan limit for the area. In this case, your loan will not be considered as a jumbo loan.
You can use this to find out more about tailored loan limits specific to where you want to buy a home in Kansas. FHFA Map,
What Are The Requirements For Jumbo Loans In Kansas?
To qualify for a jumbo loan in Kansas, borrowers must meet more stringent requirements than a conforming loan. The specific requirements may differ from lender to lender, but below are the specific requirements for borrowers seeking jumbo loans.
High Credit Score: In order to approve your loan application for a jumbo loan, most lenders will require a credit score of 720 or higher. Although some lenders may be more lenient and accept a score as low as 660, a score below this is generally not accepted. Conversely, a credit score as low as 620 may be sufficient for a loan tailored to some lenders.
Large Advance Payment: Jumbo loans are a popular financing option for home buyers looking to purchase higher priced homes. However, compared to conventional loans, jumbo loans usually require a larger loan amount. advanced payment, While the exact amount varies depending on the financial profile of the lender and borrower, down payment requirements for jumbo loans can be as high as 20% or more. It’s worth noting that putting down a large amount upfront can often help borrowers secure a better interest rate on their jumbo loan.
More Assets: Jumbo loan borrowers usually require additional assets. In particular, lenders may require borrowers to demonstrate sufficient liquid assets or savings to cover one year’s loan payments.
Low debt-to-income ratio (DTI): Mortgage Lenders Consider the Borrower debt-to-income ratio (DTI) While evaluating their eligibility for jumbo loans. To qualify for a jumbo mortgage in Kansas, borrowers typically need a DTI of less than 43%, although closer to 36% is preferred. The DTI represents the borrower’s monthly loan payment divided by their monthly gross income.
Additional Home Appraisals: For jumbo loans, mortgage lenders may need a second home appraisal To ensure that the value of the property is accurate. This is especially true in areas where comparable property sales are very low. The appraisal serves as a second opinion and helps the mortgage lender reduce their risk. It’s important to note that the cost of a second appraisal can be higher than a typical home appraisal, especially in low-sale areas.
