High Balance Loans in Non-High-Balance Areas
High balance loans have existed for a long time in states like California and New York, states where property values are high. They come with higher interest rates than conforming conventional loans but, otherwise, they’re a lot like conforming conventional loan and not a lot like jumbo loans, though, technically, they are jumbos.
If you’re about to get a mortgage that’s higher than Fannie Mae’s limit by at least one dollar but less than $679,650, you might want to look for a lender that will treat your loan like a mini-jumbo (high-balance loan).
At this point, not all lenders offer such loans, hopefully they will all end up doing it.
The reasons to look for such a lender that offers mini-jumbo loans?
- Though higher than that of conventional loans, the interest rate of high-balance loans is lower than that of jumbo loans.
- They do not require you to have months and months of reserves. (If the automated systems used to qualify you (DU) requires reserves, they’d be 3-months’ worth of PITI (principal, interest, taxes and insurance) not 9 or 12. (If DU requires reserves for a particular borrowers applying for a mini-jumbo, it would require it for a conforming conventional too.)
Yes, qualifying for a mini-jumbo / high balance loan requires higher credit scores, but if you qualify you are ahead.
