What is a jumbo interest-only mortgage?
A jumbo loan, or jumbo mortgage, is a type of home lending where the loan amount is higher than the conforming loan limits set by the Federal Housing Finance Agency (FHFA). Created to finance luxury properties and homes in highly competitive local markets, jumbo mortgages have unique underwriting requirements and tax implications. Jumbo mortgages have become more popular as the cost of housing soars.
A jumbo interest-only mortgage has many benefits, primarily, allowing the borrower to make lower monthly payments in the first years of owning a home.
With a 10-year interest-only mortgage, the period that you have a rate lock expires only at the end of the initial ten years. With an interest-only mortgage, you could qualify for a higher loan amount, which frees up cash flow during the interest-only period.
When does a jumbo interest-only mortgage makes sense?
An interest-only mortgage could make sense for buyers who plan to sell a property within a shorter time period, who plan to use the savings to cover other expenses, and/or who are confident they can afford the eventual increased payment.
A jumbo interest-only mortgage makes sense for those who are:
- Self employed
- Have a commission-based income
- Leverage your liquid assets for gains
- Have rising income
Features of a jumbo interest-only mortgage
There are many features you should know about jumbo interest-only mortgages before you apply. Features include:
- Lower, interest-only payments for the first 10 years of your loan
- During the interest-only period, your monthly payment could be tax deductible (consult with a tax professional to confirm)
- Loan options are available for purchase and cash-out refinances
- Eligible property types include primary and secondary residences
- Can be used for single-family homes, condos, or unit developments
How to get a jumbo interest-only mortgage
Make sure you qualify.
There is a high income requirement for jumbo mortgages. You must also have excellent credit and healthy savings. If you have all three, you’re more likely to secure the best rate. The reserve requirement for a jumbo mortgage is significantly higher compared to conventional mortgages. Your lender will want to see 6-12 months of mortgage payments, plus sufficient funds to cover closing costs.
Gather documentation.
You will need to show lenders proof of income, your credit history, and your assets.
Contact Masihi Financial Group
We’ll work with you to secure a competitive rate on a jumbo interest-only mortgage.
Masihi financial group jumbo interest-only mortgages
Whether you are looking to purchase a home or refinance, Masihi Financial Group often secures rates well below the national average to help you land your dream home for less. We work with the country’s top lenders. Leveraging a wide range of diversified lenders and loan programs help us arrange the best financing options for you. We are committed to providing a seamless and stress-free experience. Contact us to get your rate today.