FHA Jumbo Loans, also known as non-conforming loans, are mortgages that exceed the county limit for mortgage loans in that area. FHA home loans in excess of these limits (also known as FHA loan limits) are possible, but there are some important factors you should know about before applying.
FHA Jumbo Loans Are Like “Standard” FHA Mortgage Loans
Some borrowers want to know if they can apply for an FHA Jumbo Loan that exceeds the value of the home and take the remainder of the mortgage loan out in cash at closing time. FHA home loans are specifically designed to prevent cash back to the borrower at closing time except in the form of legitimate refunds.
If you paid cash for something up front that was later financed into the mortgage loan amount, you would be entitled to that exact sum refunded to you at closing.
That is not the same as getting cash back at closing, which FHA loan rules do not permit. So if you are applying for an FHA Jumbo Loan, those cash back rules would apply the same as a traditional FHA mortgage.
Jumbo Loan Costs
FHA Jumbo loans or non-conforming loan costs are higher than typical FHA mortgage loans, and depending on the participating FHA lender, the FICO score minimum requirements may be higher also.
This is a factor that may vary among lenders, so it’s good to ask up front about any higher credit requirements for these mortgages. You may find that non-traditional credit is a problem with non-conforming loans even when it’s not an issue with FHA mortgages that fall on or below the FHA loan limit.
Jumbo Loans And Down Payment Assistance
No down payment assistance is permitted on FHA mortgages above $417,000, so Jumbo Loan borrowers will need to budget for the down payment requirement for these non-conforming loan transactions.
FHA Loan Limits Vary
FHA loan limits are not identical for all housing markets, so what constitutes an FHA Jumbo Loan amount in Utah may not be the same as what is considered a Jumbo Loan or non-conforming loan in a more expensive housing market in California, Hawaii, etc.
In some areas the FHA limit for standard loans is at or near $417,000, but in more expensive housing markets, the limit may be closer to $625,500. Your FHA Jumbo Loan in Hawaii will be higher than it might be in Utah. Talk to a loan officer to determine what the official FHA loan limit is in your chosen housing market, and how that may affect the amount allowed for your FHA Jumbo Loan.