Buying a home is likely one of the biggest financial decisions you’ll make in your life. With home prices continuing to rise across the country, many homebuyers need jumbo loans to finance their dream homes. A jumbo loan is a mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA).
Jumbo loans allow you to borrow more money, but they also come with stricter requirements Using a jumbo loan mortgage calculator can help simplify the process and give you a better sense of your monthly payments. In this article, we’ll explain what a jumbo loan is, who should consider one, and how to use a jumbo loan calculator to estimate your monthly mortgage payment.
What is a Jumbo Loan?
A jumbo loan is a home loan that exceeds the conforming loan limits established by the FHFA for a given area. The baseline conforming loan limit for most of the United States in 2023 is $726,200. This means if you borrow more than $726,200, it is considered a jumbo loan. The conforming loan limits are higher in certain high-cost areas like New York, San Francisco, and Hawaii.
Jumbo loans are offered by private lenders and banks rather than government-sponsored enterprises like Fannie Mae and Freddie Mac. Because they exceed the conforming loan limits, jumbo loans are considered higher risk. That’s why jumbo loan programs have stricter eligibility requirements compared to conforming loans.
Jumbo Loan Requirements
Here are some common requirements for jumbo loan programs:
- Credit score: 720 or higher
- Down payment: At least 20% to avoid private mortgage insurance (PMI)
- Debt-to-income ratio: 36% or lower
- Loan-to-value ratio: 80% or lower
- Cash reserves: Varies by lender, often 6-12 months of mortgage payments
As you can see, jumbo loan requirements are more stringent than typical mortgage loans. You’ll need an excellent credit score, significant assets, and a lower debt-to-income ratio. Meeting these requirements demonstrates you are lower risk and can comfortably afford the larger loan amount.
Who Should Consider a Jumbo Loan?
Jumbo loans are best suited for high-income borrowers looking to purchase more expensive homes. Here are a few examples of situations when a jumbo mortgage may make sense:
- Buying a luxury home or in a high-cost real estate market like California or New York
- Have significant assets but need to finance most of the home purchase
- Looking to buy a high-value home as a primary residence
- Don’t want to put down more than 20% as a down payment
- Have great credit (720+ credit score) and low debt-to-income ratio
If your home purchase exceeds the conforming loan limits in your county, a jumbo loan allows you to finance up to the appraised value of the home. Just be aware you’ll face stricter approval criteria and potentially higher interest rates.
How Do Jumbo Loan Rates Compare?
Jumbo mortgage rates are typically 0.25% – 0.5% higher than conforming loan rates for buyers with good credit. The increased risk for lenders is passed along to the borrower through a slightly higher interest rate. The rate difference between jumbo and conforming loans has narrowed in recent years, but still exists in most cases.
The best jumbo mortgage rates usually start around 4% – 5% for a 30-year fixed-rate loan, depending on your credit score, loan amount, and down payment. Jumbo ARM loans may have starting rates as low as 3.5% – 4.5%. Be sure to shop around with multiple lenders to find the best rate for your situation.
How Does a Jumbo Loan Mortgage Calculator Work?
A jumbo loan calculator allows you to estimate your monthly mortgage payment based on your loan details. It takes into account factors like:
- Loan amount
- Interest rate
- Loan term (e.g. 15 or 30 years)
- Down payment
- Property taxes
- Homeowners insurance
- PMI (if applicable)
You input these numbers and the calculator does the math to estimate your principal, interest, taxes, insurance, and PMI. It combines them all into an estimated monthly payment.
Jumbo loan calculators help you determine if you can comfortably afford the larger monthly payment. And you can experiment with different down payments, rates, and terms to find the optimal loan scenario.
Let’s walk through an example…
Jumbo Loan Mortgage Calculator Example
Here’s how a jumbo loan calculator can estimate your monthly mortgage payment:
- Loan amount: $750,000
- Down payment: $200,000 (20% down)
- Interest rate: 4.5% on a 30-year fixed loan
- Property taxes: $800/month
- Homeowners insurance: $100/month
- PMI: None since 20% down
You input these numbers into the jumbo loan calculator. It calculates your principal and interest payment is about $3,070 based on the $550,000 loan amount at 4.5% interest. Add in the estimated $900 for taxes and insurance, and the total monthly payment is around $3,970.
A jumbo loan calculator allows you to estimate your complete monthly housing payment. You can adjust the numbers to match your specific loan scenario. This gives you an idea of the monthly cash flow required for a jumbo mortgage.
Finding a Jumbo Loan Calculator
Many lender websites provide jumbo loan mortgage calculators you can use. For example:
- Calculator.net – Basic jumbo loan calculator
- Bank of America – Bank of America’s jumbo loan calculator
- Chase – Chase’s jumbo loan payment calculator
These tools allow you to adjust the loan details to match your situation. This gives you an estimated monthly mortgage payment before applying.
You can also find jumbo loan calculators on sites like NerdWallet, LendingTree, and Zillow. Just search “jumbo mortgage calculator” to compare options.
Should You Consider a Jumbo Loan?
Jumbo loans provide a financing option if you need to borrow above the conforming loan limits in your county. While you’ll face stricter approval criteria, a jumbo loan allows you to buy a more expensive home as your primary residence.
Be sure to use a jumbo loan calculator early in the home shopping process. This will give you an idea of the monthly payment and whether it fits your budget. Just remember there may be other costs like HOA fees and higher income taxes that aren’t factored in.
A qualified mortgage lender can guide you through the jumbo loan process and help determine if it’s the right fit. But the jumbo loan calculator is a handy starting point as you explore home financing options for a luxury purchase.
How to use the jumbo loan calculator
To see the estimate of monthly house payments enter the:
- Homes price (or the price you expect to pay).
- Down payment amount.
- Interest rate. If you need help coming up with a number, follow the link under that field to see the rates that lenders currently offer.
- Term — 15 or 30 years. A 15-year mortgage has higher monthly payments, but you pay it off quicker; a 30-year loan has more affordable payments, but you pay more interest over the life of the loan.
- Credit score range.
Under “Results,” see the estimated monthly payments, including property taxes and homeowners insurance, as well as the total estimated payout over the life of the loan, including the down payment.
Select “Monthly,” and youll see the payment broken down by principal and interest, estimated property tax and estimated homeowners insurance.
Under “Total,” see the down payment, the principal (which is the same as the loan amount), all of the interest paid and the total estimated homeowners insurance and property tax paid over the life of the loan.
Conforming loan limits
Conforming loans are conventional mortgages that stay under the FHFA loan limits and follow underwriting guidelines set by Fannie Mae and Freddie Mac, government-sponsored entities that purchase mortgages from lenders.
Jumbo loans are nonconforming because they exceed the loan limits. Jumbo loans often require down payments of 10% to 20% or more and have stricter credit requirements than other mortgages.
The conforming loan limit for 2024 in most counties is $766,550 but is more in high-cost areas. The upper threshold is $1,149,825 in the most expensive housing markets.
WHAT IS A JUMBO LOAN | MORTGAGE CALCULATOR
FAQ
What is the current jumbo mortgage rate?
|
Product
|
Interest Rate
|
APR
|
|
30-Year Fixed Rate Jumbo
|
7.21%
|
7.26%
|
|
30-Year Fixed Rate
|
7.10%
|
7.15%
|
|
15-Year Fixed Rate
|
6.64%
|
6.71%
|
|
5-1 ARM
|
6.82%
|
7.97%
|
Is $600000 a Jumbo loan?
What is the jumbo mortgage limit for 2024?
How to determine a Jumbo loan?
How does a jumbo mortgage calculator work?
The NerdWallet jumbo mortgage calculator includes four main factors in a large home loan: Principal. This is the borrowed amount, equal to the home’s price minus the down payment. Each mortgage payment repays a portion of the principal. A slightly larger amount goes toward your loan balance with each successive payment. Interest.
How do I calculate my jumbo loan payment?
Use NerdWallet’s free jumbo loan calculator to estimate your monthly mortgage payment, including principal and interest, property tax and home insurance.
How do I get a jumbo mortgage estimate?
Use this jumbo mortgage calculator to get an estimate. A jumbo loan is a non-conforming loan for loan amounts greater than $766,550 for a single-family home. In certain high cost areas, including Alaska and Hawaii, the conforming limit is up to $1,149,825. Move the sliders or type in a specific number to estimate your monthly mortgage payment.
How much does a jumbo mortgage cost?
For the overall cost, expect jumbo mortgages to be more expensive than conforming conventional loans. This will be anywhere between 3 percent to 6 percent of your home’s value. For conforming conventional loans, borrowers must pay a private mortgage insurance if they make a downpayment less than 20% of the home’s price.