Mark Hunke

Denver Real Estate Specialist

The Mark Hunke Team
Your Denver Real Estate Experts
Call Us Today
303-619-7793
  • Home
  • Luxury Communities
    • Castle Pines Village
    • Chenango in Centennial, Colorado
    • Cherry Creek
    • Cherry Hills Village Real Estate
    • Denver’s Country Clubs
    • Denver Executive Homes
    • Denver Highlands
    • Greenwood Village
    • Highlands Ranch Real Estate
    • Observatory Park
    • Park Hill Colorado
    • Polo Grounds Colorado
    • The Preserve Colorado
    • The Pinery, Parker, the Club at Pradera
    • Red Rocks Country Club, Willow Springs, Willow Brook
    • South Aurora, Colorado Real Estate
    • Washington Park
  • Luxury Home Search
    • Luxury Home Search Form
    • Featured Properties
    • Map Search – Denver Luxury Homes
    • Find My Dream Home
    • Denver Relocation Guide
    • Get Luxury Property Alerts
  • Buyers
    • Buying a Home
    • Step 1 – Choose a Realtor
    • Step 2 – Get a Loan!
    • Step 3 – Research the Neighborhood
    • Step 4 – Submitting the Offer
    • Step 5 – Closing The Deal & Moving In
  • Sellers
    • Sell Your Home
    • Selecting a Professional Denver Luxury REALTOR®
    • Are You Ready to Sell a Luxury Property in the Denver Area?
    • Determining the Listing Price
    • Real Estate – Selling Your Home FAQ
    • What’s the Best Listing Price For Your House?
  • Finance
  • About
    • About Mark Hunke
    • Denver Real Estate Blog
    • Letters of Recommendation
    • Realtors – Join The K Company
  • Contact

How to Get Your First Luxury Home Mortgage

February 16, 2017 By Mark Hunke

If you’re interested in buying a luxury home, you’ll need to take a different approach than when you buy a traditional single-family home. Unless you’re paying for much of the purchase price in cash, chances are good you’ll need a jumbo loan. Here’s what you need to qualify for a luxury home mortgage – and what you should expect along the way.

luxury home mortgageWhen You’ll Need a Jumbo Loan

When you need a luxury home mortgage that’s valued at more than $424,100, you’ll need to apply for a jumbo loan. It’s called a jumbo loan because it’s larger than a traditional mortgage, and anything exceeding $424,100 will not be backed by Fannie May or Freddie Mac. This makes a luxury home mortgage riskier for lenders, and because of this, the qualifications are quite strict. Even if you have outstanding credit, you should expect higher interest rates than with a traditional 30-year fixed loan.

Typical Qualifications

If you’re interested in a luxury home mortgage, there are a few guidelines that tend to fit all lenders.

  • A credit score of at least 680. Not all lenders will give you a luxury home mortgage with a credit score of 680, and it’s always a good idea to raise your credit score as high as possible before settling into your mortgage. The lower your credit score, the higher your interest rate. With a jumbo loan, that could mean hundreds of thousands of dollars over the life of your loan.
  • A down payment. You may be able to obtain a luxury home mortgage without mortgage insurance requirements for as little as 5% to 10% down, but for the absolute best results and the lowest interest rates, aim to pay between 15% and 20% of the home value as your down payment.
  • A good debt-income ratio. On average, you’ll need to debt-to-income ratio of 43% or less to secure a jumbo loan. This means that your debt should not exceed 43% of your monthly income.
  • A savings account. Due to the risks involved for lenders, many lenders want to see proof that you have between six and 12 months’ worth of income available to you in savings, bonds, or other assets.

What to Expect

Traditional home loans take about 30 days to close thanks to the simple underwriting process. However, when it comes to a luxury home mortgage, underwriting is far more complex. In fact, your application may be subject to more than one underwriting review, and this is especially true if your lender will have outside investors help them fund your loan. Prepare for multiple underwriting reviews, and expect the process to take up to 60 days rather than 30. With that in mind, it’s important that you seek your prequalification early if you’re interested in taking out a jumbo loan.

Although many of the same guidelines and rules apply to both a traditional and a luxury home mortgage, there are stricter guidelines and more underwriting involved with obtaining a jumbo loan. Remember to shop around since different lenders have different requirements, too.

Filed Under: Financing Tagged With: interest, luxury homes, mortgage

Recent Posts

  • New Home Sales Slow Despite Lower Prices
  • Higher Credit Scores are Coming: Are You One of the Lucky Ones?
  • The Housing Market Slump Still Exists in Some Locations
  • Fewer New Builds – Why the Sudden Slowdown?
  • Do Walk-In Closets Improve Home Values?

Categories

  • Centennial Colorado
  • Cherry Hills
  • Denver Area
  • Denver Real Estate
  • Energy Efficient Properties
  • Financing
  • Greenwood Village
  • Highlands Ranch
  • Home Buyers
  • Home Rentals
  • Home Sellers
  • Investment Properties
  • Job Market
  • Luxury Homes
  • Parker Colorado
  • Real Estate
  • Uncategorized

Search for Homes

  • Facebook
  • LinkedIn
  • RSS
  • Twitter
5-star logo
Equal Housing
Blue Fire Group    Real Estate Websites
© 2023 Copyright
LAC
Buying Buddy    Powered By Buying Buddy ®