Buying a home isn't as simple or intuitive as it used to be—especially with skyrocketing prices and an explosion of available financing options. 

And if you're a first-time buyer just setting foot in this dynamic market, you may quickly find yourself in jumbo loan territory with more questions than you can find answers for.

Don't worry! We've put together a helpful resource that answers your most basic questions and gives you all tips and tricks you need so you can make an informed decision on how to finance your dream home. 

It's not as difficult as you might think.

TLDR Key Takeaways

• Aspiring first-time homebuyers can qualify for jumbo loans.
• In general, qualifying for jumbo loans is typically more challenging than conforming loan amounts due to the added risk for the lender and the increased financial requirements for borrowers.
• To increase your chances of obtaining a jumbo loan as a first-time buyer, focus on strengthening key financial factors such as increasing your credit score and decreasing your debt-to-income ratio. 

Can a First-Time Buyer Get a Jumbo Loan?

The short and sweet answer is yes, you can get a jumbo loan if you're considered a first-time buyer (someone who hasn't owned a home in the past three years). But you should know a few things before you run off and apply.

The first is that there are no specialized programs designed for first-time buyers who seek out jumbo loans. 

That means you won't get to take advantage of state and local agency incentives, such as low down payments, tax credits, covered closing costs, etc., like other first-timers.

Now that doesn't mean you can't get a low down payment jumbo loan, but it does mean that you'll have to meet particular requirements to qualify for that product.

Secondly, the loan limits for conforming loans raised to $726,000 for most of the US and $1,089,300 for areas considered to be "high cost," such as Los Angeles, New York, and south Florida, among others.

This is a decent jump from the $647,200/$970,800 limit it was in 2022. So while you may have thought you needed a jumbo loan before, the changes to the loan limits may mean you can qualify for a traditional mortgage instead. 

Finally, even though it's possible to obtain a jumbo loan as a first-time home buyer, you might find yourself with slightly different requirements than other jumbo loan borrowers. 

It's important to note that each lender will have different underwriting guidelines. So make sure you research and shop around to find the lender that's best for you.

Is It Harder to Qualify for a Jumbo Loan vs. Traditional Loan as a First-Time Buyer?

This question is a bit more complicated to answer, but generally, first-time buyers can expect jumbo loans to be slightly harder to qualify for than conforming loans. Why?

Well, there are two main reasons: Lender risk and borrower's financial situation.

Lender Risk

In general, jumbo loans pose a higher risk to lenders than traditional conforming mortgages because they lack government backing. That means they have more difficulty recouping their money if something happens.

This makes them slightly harder to qualify for—period.

Borrower's Financial Situation

Borrowers seeking jumbo loans, regardless of their experience, must demonstrate strong financial stability to get approved. This typically includes having a reliable income, sufficient cash reserves, and a 5-20% down payment.

This is where many first-time home buyers run into difficulties, which is why many traditional loans have specialized programs to assist with this hurdle (as we mentioned before).

But jumbo loans don't have these programs. That means first-timers should expect to have at least $145,000 to $217,800 on hand for a standard 20% down payment or $72,600 to $108,900 for a 10% jumbo loan.

Bottom line: If you're not financially ready, you'll find qualifying for a jumbo loan more difficult.

What Are the Jumbo Loan Requirements for First-Time Buyers?

Getting a jumbo loan depends on the type you get and the lender's guidelines. For example, a 5% down jumbo loan will have stricter requirements than a 20% down loan. 

Having said that, all borrowers are expected to meet several basic requirements, including:

• Proof of stable income: Borrowers need at least two years' worth of documentation (tax returns, W2s, pay stubs, bank statements, etc.) to prove their income.
• Healthy credit score: The minimum score for most jumbo loans is 680.
• Low debt-to-income ratio (DTI): Most lenders want to see a DTI of 45% or lower for first-time home buyers.
• Reasonable down payment: Typically, first-time buyers will need a minimum of 20%; however, some lenders will lower the borrower has a strong credit score and a low DTI. 
• Sufficient cash reserves: While not every lender will require this, it's worth noting that some lenders want to see 6-18 months' worth of cash reserves.

How to Improve the Odds of Securing a Jumbo Loan as a First-Time Buyer?

While getting a jumbo loan might not be as hard as you thought, here are some tips to make the process even easier: 

• Maximize your credit score: Try to get your score as high as possible before applying by disputing incorrect information, paying your bills on time, and reducing debt.
• Bring your DTI down: While lenders will accept a DTI of 45%, they prefer to see DTIs of 36% or lower.
• Pad your down payment: Even if you want to try for a low down payment option, try to save up for more than you plan on putting down. This will prove financAre you a first-time home buyer looking to finance a larger home with a jumbo loan? In this guide, we'll provide tips and options for securing a jumbo loan as a first-time home buyer, including information on down payment requirements and other financing considerations.ial responsibility and help you out if you need to show additional cash reserves.
• Research your options: Don't be afraid to shop around and compare lenders to get the best rates and terms. 

Explore Your Jumbo Loan Options with MDL

At Modern Day Lending, we understand that taking out a large loan as a first-time home buyer can be intimidating and overwhelming, so our team strives to take the stress out of the whole process. 

Whether you're looking for low down payment options, a jumbo construction loan, or don't know which type of jumbo loan is best for you, don't worry!

Our mortgage experts will work with you every step of the way to help you find the right product and loan size based on your credit, income, and finances.

Here's what you'll need to get started:

• A credit score of at least 620
• DTI of 45-50%
• Proof of income for the past two years
• Personal asset statements covering two months
• Driver's license

That's it! If you're ready to take the first steps towards owning your dream home or want to explore your jumbo loan options, contact one of our mortgage experts today.

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