when it comes to buying home in michigan, buyers may have difficulty finding financing beyond the conforming loan limit. If this is the case, you may need a jumbo loan. no matter where your eyes are set house in grand rapids or a condo in detroitLet’s take a look at what a jumbo loan is in Ohio, the 2023 compliant loan limits, and what is needed to qualify for this type of loan.
What is Jumbo Loan?
A jumbo loan A mortgage is a type of mortgage designed to help finance the purchase of a home in excess of a limit set by the Federal Housing Finance Agency. In Michigan, this type of loan is often required for expensive homes or properties located in expensive housing markets. With Jumbo Loans, you can get the financing you need to buy the home of your dreams, even if it’s more expensive than a standard mortgage.
If you need to borrow more than the Conforming Loan Limit (CLL) for the house you are buying, you will need to apply for a jumbo loan. However, due to the larger loan amount and the risk involved, jumbo loans often come with stricter requirements and higher interest rates than conventional loans. Lenders generally require a larger down payment, higher credit score and more assets on hand in order to qualify for a jumbo loan in Michigan.
What is the jumbo loan limit in Michigan?
In Michigan, the corresponding loan limit is $726,200 in all counties. For example, the conforming loan limit Wayne County $726,200, so any mortgage that exceeds the loan limit specified for your county by even one dollar is classified as a jumbo loan.
Keep in mind that it is the loan amount that determines whether you will need a jumbo loan, not the value of the home. In this case, your loan will not be considered as a jumbo loan. So, if you have to reduce $100,000 on $780,000 home in detroit, 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.
This FHFA Map will give you more specific information regarding the conforming loan limit in your county.
What Are The Requirements For Jumbo Loans In Michigan?
As mentioned earlier, the requirements for a jumbo loan are much more stringent than those for 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: To be eligible for a jumbo mortgage, lenders generally expect borrowers to have a credit score of at least 720. While some lenders may consider a score as low as 660, a credit score lower than that is generally not accepted.
Large Advance Payment: Getting a jumbo mortgage usually requires a larger mortgage advanced payment compared to a corresponding loan. Lenders may require a down payment of 10% to 20% or more, depending on the specific loan program and the borrower’s financial situation. If you are approved with less than a 20% down payment, keep in mind that you will most likely need to purchase private mortgage insurance (PMI).
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): To qualify for a jumbo loan in Michigan, lenders typically look for debt-to-income ratio (DTI) No more than 43%, and ideally closer to 36%. DTI is calculated by dividing the sum of all monthly loan payments by the borrower’s gross monthly income. This requirement ensures that borrowers have a strong ability to repay their loan and manage their loan.
Additional Home Appraisals: When you buy a home in Michigan, your mortgage lender will require home appraisal To confirm that the value of the property is equal to or more than the loan amount. In some cases, a lender may require an additional appraisal for a jumbo loan. In areas with very few comparable property sales, appraisal costs can be higher than in locations with more frequent sales.
