If you are purchasing a home in Seattle, Bellevue, or anywhere in Washington, you know that home prices here are high and rising. While this means that it is extra important to shop for a competitive mortgage, it also means that purchasing a home in this area can make for an excellent investment.
Depending on the value of the home you want to purchase, you might need to use a jumbo loan rather than a conventional loan to do so.
What is a Jumbo Loan?
A jumbo loan is what you need if you require financing that exceeds the limits for conventional (conforming) loans as determined and guaranteed by Fannie Mae and Freddie Mac. The loans vary by county and have been raised in 2019.
Here are the current conventional loan limits for Bellevue and Seattle:
As of the time of this writing, Zillow lists the average home value for Seattle as $728,300. You can see that this is quite close to the conventional loan limit for a single unit. So while many homes in the area can be purchased with conventional financing, quite a few require a jumbo loan.
Do You Qualify for a Jumbo Loan in Seattle or Bellevue?
Applying for a jumbo loan is a similar process to applying for conventional loan. There are a few differences:
- You may need to get the property you wish to purchase appraised twice.
- A higher credit score and lower debt-to-income ratio may be required.
- You will have to be prepared for a higher down payment, typically anywhere from 10% to 30%.
- You will need to demonstrate that you have significant cash reserves, usually anywhere from six months to one year.