For many individuals and families, owning a home is the dream of a lifetime. However, with rising real estate prices, some may find themselves looking for financing in excess of the conforming loan limit. In this instance, you would have to apply for a jumbo loan.
What is Jumbo Loan?
In South Carolina, a jumbo loan is a type of mortgage used to finance a property that exceeds the conforming loan limit set by the Federal Housing Finance Agency (FHFA). Jumbo loans are generally required for expensive homes or high priced properties housing markets like charleston, These loans are specialized and designed to borrow large amounts for expensive and luxurious properties.
If you need to borrow more than the conforming loan limit, you will need a jumbo loan. South Carolina jumbo loans allow you to borrow more money to buy a more expensive home, but they come with higher interest rates and stricter requirements than conventional loans.
What is the jumbo loan limit in South Carolina?
In South Carolina, the corresponding loan limit is $726,200 in all counties. For example, if you are buying Home in Charleston CountyWhere the average sale price is $567,000, loan limits in excess of $726,200 will be considered jumbo mortgages.
As a reminder, the loan amount determines whether or not you’ll need a jumbo loan, not the price of the home. So, if you put down $50,000 on a $750,000 home in Charleston County, the mortgage would be $700,000, 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 South Carolina?
The requirements to qualify for a jumbo loan in South Carolina are more stringent than the requirements 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 approved for a jumbo mortgage, 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: Keep this in mind when applying for a jumbo mortgage advanced payment The requirements are generally more onerous than those of a conventional mortgage. While the specific amount will depend on the financial situation of the lender and borrower, many jumbo loan lenders require a down payment of at least 10%, and some require 20% or more.
More Assets: To qualify for jumbo loans, lenders require borrowers to demonstrate that they have sufficient liquid assets or savings to cover at least one year of loan payments. The exact amount of assets required will vary depending on the lender and the size of the loan, but having more assets can increase your chances of approval and potentially lead to better terms and interest rates.
Low debt-to-income ratio (DTI): Whether you’re applying for a traditional mortgage or a jumbo loan, lenders analyze you to assess your spending habits and creditworthiness. debt-to-income ratio (DTI), DTI is determined by dividing your total monthly loan payments by your gross monthly income. While some lenders may accept a DTI of up to 50% for a conforming loan, those applying for a nonconforming loan should aim for a DTI of less than 43% and ideally closer to 36%.
Additional Home Appraisals: A home appraisal It is required whenever a home buyer seeks financing for the purchase of his home. However, for jumbo loans, your lender may require an additional appraisal. In areas with limited comparable property sales, this appraisal may be more expensive than in areas with higher sales rates.
