Depending on the loan amount you need and where you’re buying a home in Nevada, you may find it difficult to find financing beyond the conforming loan limits. If this is the case, you may need a jumbo loan. Whether your sights are set on a new house in Las Vegas or a luxury property in Reno, join us as we delve into the intricacies of jumbo loans in Nevada in 2024.
What is a jumbo loan?
In Nevada, a jumbo loan is a type of mortgage used to finance a property that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). Jumbo loans are typically necessary for expensive homes or properties in high-priced housing markets. These loans are specialized and designed to accommodate larger amounts of borrowing for upscale and luxurious properties.
If you find yourself in a situation where the home you wish to purchase requires borrowing beyond the conforming loan limit (CLL), then you’ll need to pursue a jumbo loan. But because of the larger loan amounts and increased risk for lenders, Nevada jumbo loans often come with higher interest rates and stricter requirements than conventional loans. For instance, a larger down payment and a higher credit score may be required to qualify for a jumbo loan.
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What is the jumbo loan limit in Nevada?
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In Nevada, the conforming loan limit is $766,550 across all counties. For example, if you’re buying a home in Clark County, where the median sale price is $400,000, a loan limit exceeding $766,550 would be considered a jumbo mortgage.
As a reminder, the amount being borrowed is what determines whether or not you’ll need a jumbo loan, not the price of the home. So, if you were to put $50,000 down on a $750,000 home in Henderson, the loan would be $700,000, which is under the CLL for this area. In this case, your loan wouldn’t be considered a jumbo loan.
This FHFA map will give you more specific information related to the conforming loan limits in your county.
What are the requirements for a jumbo loan in Nevada?
As previously mentioned, the requirements for a jumbo loan are much more stringent than a conforming loan. Each lender may have different requirements or processes, but below are the typical requirements for borrowers seeking a jumbo loan in Nevada.
Higher credit score: When it comes to securing a jumbo loan, credit score requirements are typically more stringent than for conventional mortgages. While some lenders may be willing to accept a lower score, a credit score of at least 720 is generally required to qualify for a jumbo loan. It’s important to have a strong credit profile and a solid financial history to increase your chances of being approved for a jumbo mortgage.
Larger down payment: Jumbo loans typically require larger down payments than conventional loans. While the exact amount varies depending on the lender and the borrower’s financial profile, down payment requirements for jumbo loans can be as high as 20% or more. That said, some lenders may offer jumbo loans with down payments as low as 10%, provided the borrower meets certain credit and income requirements.
More assets: Jumbo loan borrowers are typically required to have additional assets. In particular, lenders may require borrowers to demonstrate sufficient liquid assets or savings to cover one year’s worth of loan payments.
Lower debt-to-income ratio (DTI): Mortgage lenders consider a borrower’s debt-to-income ratio (DTI) when evaluating their eligibility for a jumbo loan. To qualify for a jumbo mortgage in Nevada, applicants typically need a DTI below 43%, though closer to 36% is preferred. The DTI represents the borrower’s monthly debt payments divided by their gross monthly income.
Additional home appraisals: A home appraisal is required whenever a homebuyer receives financing for their home purchase. However, for jumbo loans, a mortgage lender may require an additional appraisal. In areas with limited comparable property sales, this appraisal can be more expensive than in housing markets with higher sales rates.
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