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If government-backed loans haven't increased, how can I get a jumbo loan?
Some home buyers in pricey markets could face higher down payments this year if home prices outrun maximum limits for government-backed mortgages.
For 2016, Fannie May and Freddie Mac have not increased the loan backing from $417 or less or $625 in high-cost cities of California and New York. In those areas, some counties will finance mortgages that are somewhat higher.
But not to worry. Most buyers who have to move from government backed mortgages won't get much of a hit on interest rates. One major lender, for example, recently advertised a 30-year fixed-rate jumbo mortgage rate of 4.125 percent. This is only slightly higher than the 3.75 percent rate for government-backed loans.
But you may be stuck with a higher down payment requirement on a jumbo. Fannie Mae and Freddie Mac allow for a down payment of as little as 3 percent. Many jumbo lenders ask 10 percent or even 15 percent. A borrower's credit score also has to be higher when he or she gets a jumbo loan.
The hurtle for many buyers moving from a government-backed mortgage is the higher qualifications for getting a jumbo loan. But many people are still qualifying.
One San Francisco mortgage broker said nearly four out of five home buyers need jumbo mortgages in San Francisco, up from less than half of borrowers five years ago.
He says buyers in his area often come from the high-paying technology industry and usually have the incomes to pay on a jumbo loan. But they don't have the down payment or six to 12 months of mortgage payments in reserve that the loans require. The broker says most homes in his area cost about a million bucks.
In most parts of the United States, where the median home price is $219,600, the federal mortgage limit isn't a problem.
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