After reading about the differences between conforming and Jumbo loans, one might think lenders should steer clear of them. However, that is not the case at all. As will all types of mortgage loans, there are pros and cons.
Below are some benefits.
More affordable in terms of interest rates.
Attractive tax breaks regarding interest paid. Borrowers can claim interest payments on loans up to $1 million.
No private mortgage insurance required.
They make it possible for home buyers to purchase high-priced homes.
Lower interest rates are possible with higher credit scores.
Are Veterans Eligible for Jumbo Loans?
The good news for veterans is that they are also eligible as long as they satisfy the eligibility requirements for mortgage loans and for Jumbo loans. The main difference between Jumbo VA loans and regular loans is that VA loans are guaranteed by the Department of Veterans Affairs.
However, although the VA’s loan guaranty program may not have a maximum dollar amount that at veteran can borrow, they do have a limit of how much they’ll guarantee.
Except for a few counties that have higher-priced homes, the maximum amount the VA will guarantee as of January 1, 2018 is $453,100.
So, does this mean that veterans can’t get a Jumbo loan for a home that’s $500,000? Absolutely not!
What it means is that the VA will only guarantee up to $453,100, and the veteran will have to pay 25 percent of the amount over $453,100.
For instance, a veteran has found his dream home for $600,000 and applies for a Jumbo loan. The VA will guarantee up to $453,100, so the veteran will have to pay a down payment of $36,725, which is 25 percent of the amount over $453,000.