Minnesota Jumbo Home Loan
Certain home loans are secured by government-sponsored entities if they conform to loan limits, but higher loan amounts are called jumbo loans and are not secured. Minnesota Jumbo home loan limits can vary based on where you are located. A few counties in California for example, have higher jumbo loan limits than Minnesota, due to the high cost of the average homes in certain areas.
Fannie Mae and Freddie Mac are the nicknames bestowed upon two government-sponsored entities -- the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. These corporations have an active role in providing financial security to mortgage lenders and banks by purchasing certain mortgage loans from them. The limits for loans that Fannie or Freddie will handle has played a role in creating the concept of "jumbo loans."
Conforming Loans vs. Jumbo Loans
Fannie Mae and Freddie Mac only purchase loans that they deem as "conforming." There are various qualifications that a mortgage loan has to meet to conform to the rules, but one of the most important is the actual loan amount. At the time of publication, the conforming loan limits were set at $417,000 for a single-family residence, and as much as $801,950 for a four-unit property in Minnesota. Loans in amounts greater than these are called "jumbo loans," and loans greater than $1 million, on average, are considered "super jumbo loans."
Minnesota Jumbo Home Loan Qualifications
Even though there's a higher risk involved when approving jumbo loans, many lenders still offer them. Your approval criteria is scrutinized in more detail, and you'll also pay a higher interest rate and a larger down payment -- 20 to 30 percent -- compared to a conforming loan amount. To qualify for a jumbo loan, first you'll need to earn enough income to support the payments. Additionally, your credit score should be excellent -- in the high 600s at minimum. The lender also looks at your debt-to-income ratio and the appraised value of the property during the underwriting phase.