Buying And Financing a Home In California or Florida
If you are looking to purchase a home in upscale neighborhoods or expensive cities like Los Angeles, San Francisco, and San Diego in California or Winter Park, Naples, and Longboat Key in the Sunshine State understand that mortgage financing is more demanding for homes in these locations.
Mortgage loans above $750,000 are tougher to sell to investors, and a lot of lenders view them as higher risk loans. The best course of action is to be pre-approved (or strongly pre-qualified) for a residential mortgage prior to viewing homes and putting in offers in these expensive cities.
Mortgages for expensive homes in the above mentioned states are known as “jumbo” or “non-conforming” loans. Even larger loans for one-million dollar plus homes are labeled as “super-jumbo” mortgages.
Conforming Loan Limits
In 2017, the conforming loan limit will be raised to $424,100 for a single-family home in the majority of U.S. counties.
In locations with higher-priced homes like the San Francisco Bay area, and the counties of Ventura, L.A., and Orange County, the limit is $636,150 (and increase from $625,500). These loans are every so often referred to as “jumbo-conforming” or “super-conforming.”
Qualifying For A Jumbo Mortgage
Getting approved for a jumbo mortgage is not that difficult if you have a FICO credit score greater than 680 and sufficient liquid reserves (savings or a rainy day fund) of six or more months to pay your mortgage in case of job loss or unexpected financial trouble.
Borrowers who have really good credit scores above 740, a consistently high income, and substantial savings may be approved for 90 percent financing with these same loan programs.
Financing for Applicants with Challenges
Alternatives do exist for a segment of borrowers who have credit scores below 680 yet still have solid income and an emergency fund. And there are certainly borrowers who have high credit scores and income, yet they take a substantial amount of write-offs on their tax returns. These borrowers may qualify under an alternative income document product. These loans typically have more demands from underwriters.
Getting a Property in High Demand Cities
With many realtors and buyers frustrated with a lack of inventory for single family homes, you may want to become an owner-occupant landlord and purchase a 2 – 4 unit property. Here’s why.
– Loan limits for Conforming and FHA financing is higher for multi-family properties consisting of two to four properties.
– The rental income may be used to increase your income and lower your debt-to-income ratio.
“The best method when you’re in the market to buy a home in an expensive area is to have a pre-approval letter from a trusted lender who has verified your down payment, income and job. You can do just that with a licensed loan rep. from this site.