Jumbo mortgage rates are near record lows, but there’s a catch for borrowers looking for home loans above the amount Fannie Mae and Freddie Mac will guarantee: It hasn’t been this tough to get a jumbo in four years.
Jumbo lenders like Chase and Wells Fargo beefed-up their standards when the economy began crumbling in mid-March and some stopped funding the home loans that exceed the amount the government will back, usually those above $510,400.
That currently leaves smaller players in the market like Sprout and Luxury Mortgage, and some portfolio lenders like Union Bank in West Coast states, though they typically are only lending to borrowers who meet stricter standards, like having extra cash reserves on hand, said Mark Goldman, a loan officer with C2 Financial.
“There’s a lot more risk for lenders when it comes to jumbo mortgages,” said Goldman. “If you have a $300,000 loan go bad on you, that’s a terrible thing, but if you have a $600,000 mortgage go into default, that’s twice as bad.”