In our latest chat with Connie Lindsay, we talked all about credit, jumbo loans, financing in Seattle, and financing options for people with H-1B visas. Connie answered some common questions for our market here in Seattle, and if you’re thinking about buying a home, it’s really never too soon to start thinking about financing.
Q: What is a jumbo loan, and how can I qualify for one?
A: In Seattle these days, when people are qualifying for a home, 90% of the time they’re getting a jumbo loan (also known as a “non-conforming” loan).
A jumbo loan has many financing restrictions, and it’s important that your lender knows the right questions to ask upfront. Do you have an installment loan (like a car payment, or something ongoing)? Do you have the proper lines of credit?
You need at least 3-4 credit cards and/or trade lines with a minimum of a 12-24 month history to get a jumbo loan. If you have credit cards that you haven’t used in years, activate them. The trade line initiation date when the card was opened increases your credit score—the longer you have credit with payment history, the better. So if you’ve had a credit card since 2011 but you haven’t used it since 2016 or 2017, then you should just re-activate it and use it. And whatever you do, do not close a credit card! It will hurt your credit.
If you’re planning to purchase a home, then 6-12 months prior to searching for a home, you should be taking a very close look at your credit history.
Q: What is the difference between a jumbo loan and a conforming loan?
A: The difference between conforming loans and a jumbo loan is the loan amount. If the loan amount exceeds $592,250, that is considered jumbo financing.
For example, if you’re purchasing a home for +/- $740k with 20% down, that will be a conforming loan. If you’re purchasing a home for $750k and above with 20% down, you’re going to be jumbo financing.
Q: I have a H-1B visa. What are my financing options if I don’t qualify for a jumbo loan?
A: If jumbo financing is unattainable, a first and second combination loan is an option. With this option, your primary loan will be capped at $592,250, and the second loan would be 10-15%.
If you have an H-1B visa and can’t get a jumbo loan, this will be your best bet. Something you can do is get the combination loan option, and when you have any RSUs income, you can just put that into the second loan since it’s interest only. This way you can pay today’s price for the house!
One way to accomplish this is with a 75-15-10 loan. In this scenario, you’re putting 10% down, 75% is the main loan, and 15% is for the second loan, which keeps it conforming. This allows you to purchase at a higher price point. Or, you could do an 80-10-10 loan (10% down, 80% main loan, 10% is the second loan).
Hopefully, this brief Q&A gets the gears turning!
Have a question? Don’t hesitate to get in touch with our preferred lender, Connie Lindsay! You can reach Connie at 206.979.0900 and learn more at CaliberHomeLoans.com.