Investing / Jumbo Loans / Purchase

How To Secure Jumbo Loans in New York

Looking to secure jumbo loans in New York? The real estate market can be challenging.

New York is home to some of the most expensive real estate properties in the US – with a median listing home price of $799k (and up to $999k in areas such as Manhattan), it can be a tough market for home buyers who don’t have the know-how to navigate it properly.

Since high-cost areas like New York often exceed the conforming loan limits set by government-sponsored entities like Fannie Mae and Freddie Mac, you might need to apply for a jumbo loan if you are looking to purchase your dream home. 

But what exactly is a jumbo loan, and what do you need to know about it before diving into the real estate market? Take a look at our tips on how to secure jumbo loans in New York like a pro.

How To Secure Jumbo Loans in New York:

1. Get Up-to-Date With The Conforming Loan Limits

If you are looking to secure jumbo loans in New York, we highly recommend getting up-to-date with the conforming loan limits before you begin the application process. 

This will give you a better idea on the highest loan amount that falls within them, and the interest rates and terms you might face, thus allowing you to plan your finances more effectively. 

The conforming loan limits are changed annually by the Federal Housing Finance Agency (FHFA) – the new ones are announced in late November each year, but they don’t go into effect until January 1st of the following year. 

How are conforming loan limits determined? 

Conforming loan limits are determined based on the Housing Price Index (HPI), which measures the year-over-year percentage increase (or decrease) in average home prices. If home prices rise, the loan limit tends to increase. 

They have a baseline limit, which is the national loan limit applied to most parts of the country, and a limit for high-cost areas, which can be up to 150% of the baseline limit. Some areas of New York fall within the second category.

In 2024, the baseline limit for a single-family unit is $766,550, going up to $1,149,825 for some counties. However, make sure to double-check this information before applying if you are on the hunt for jumbo loans in New York, as it may have changed by then. 

2. Work On Your Credit Score

If you are applying for jumbo loans in New York, one of the most important tips we can give you is to work on your credit score

Since jumbo loans exceed the limits set by government-sponsored enterprises (GSEs), aka they cannot be purchased or backed up by them, they tend to pose higher risk for lenders. As a result, you might face stricter underwriting standards, including a higher credit score.

Ideally, you should aim for a credit score of at least 700. However, you might be able to score better terms and rates if your score is closer to 740 on the FICO scale. If you need to get your score up, here are some things you can do:

  • Pay down existing debts – Reducing your credit card balance, or any other debt you may have, will help you lower your credit utilization ratio, thus improving your score.
  • Pay your bills on time – Payment history matters if you are applying for jumbo loans in New York – make sure that all loans and credit cards are paid on time each month.
  • Don’t open new credit accounts – Applying for new credit can temporarily lower your score, so avoid doing that in the months leading to your mortgage application.
  • Dispute credit report errors – You can regularly check your report for errors and inaccuracies, and dispute them as soon as possible before applying. 
  • Keep old accounts open – Length history also impacts your score, so make sure to maintain old credit accounts with a good payment history. 

You can check your credit score by getting a report from the major credit bureaus such as Equifax, Experian and TransUnion

If your score isn’t there yet for jumbo loans in New York, start working on it immediately so you can increase your chances of getting approved – and of course, scoring better terms and rates.

3. Reduce Your Debt-to-Income (DTI) Ratio

Another tip on securing jumbo loans in New York is to work on your DTI ratio – this metric shows lenders how much of your monthly income goes toward debt payments, and determines whether you can handle a new loan in addition to your existing debts.

Needless to say, the lower it is, the better – most lenders prefer a DTI ratio of 43% or less, but reducing it as much as possible will likely result in more favorable rates, which mean lower overall costs for you.

To calculate your DTI, take all your monthly debts, including:

  • Car loans
  • Credit card payments
  • Other loans or mortgages you may have

And compare the total sum to your pre-tax income. If it’s not looking good, you might have to pay off some of your existing debts before applying for jumbo loans in New York. 

Alternatively, you can find additional sources of income to improve your DTI. 

4. Prepare Sufficient Cash Reserves 

As we mentioned earlier, jumbo loans in New York typically have stricter requirements compared with conventional loans, which adhere to the conforming loan limits

To qualify for jumbo loans, one of the key requirements is to have strong cash reserves, usually enough to cover 6 to 12 months of your mortgage payments.

For example, if your total monthly mortgage payment is $5,000, and the lender requires 12 months of reserves, you would need to show $60,000 in accessible, liquid funds.

All of this is important for jumbo loan lenders because it shows that you will still be able to handle your mortgage even in the case of financial disruptions. But what exactly constitutes a cash reserve? Let’s take a quick look: 

  • Saving accounts
  • Checking accounts
  • Money market accounts
  • Stocks, bonds and mutual funds
  • Certificates of Deposit (CDs)
  • Other liquid investment accounts

However, keep in mind that retirement accounts may not be accepted as a cash reserve, or they won’t be counted in full. Make sure that your reserves are in a liquid form – they should easily be accessed in case you need them.

5. Choose The Right Lender 

And last but not least, choosing the best jumbo lender is one of the most important steps you will need to take when looking for jumbo loans in New York. 

The right lender can guide you through each step of the process, and provide you with the support you need to achieve your goals. 

At Jet Direct Mortgage, our expertise is finding the right loan type and amount that is perfect for you and your family, and ensuring that the application process is as stress-free as possible. We are committed to quality customer service from start to finish.

Are you ready to get started? Apply quickly and securely within minutes with Jet Direct Mortgage, and get the best jumbo loans in New York. Whether you are looking to purchase a second home or a rental property, your next step in the journey of homeownership is just one step away!

FAQ

What is the minimum credit score required for a jumbo loan in New York?

The minimum credit score required for a jumbo loan in New York typically starts at 700, though many lenders prefer a score of 720 or higher. For the most favorable terms and interest rates, a credit score of 740+ is often recommended. 

Because jumbo loans carry more risk, lenders set stricter credit requirements to ensure borrowers have strong financial profiles. Lower scores may result in higher rates or denial.

What is the jumbo loan qualification criteria?

The qualification criteria for a jumbo loan typically include a credit score of at least 700, though 740+ is preferred for better terms. Borrowers need a down payment of 20-30%, debt-to-income (DTI) ratio below 43%, and cash reserves covering 6-12 months of payments. 

Lenders also require thorough documentation of income, assets, and employment stability due to the higher risk of jumbo loans.

Do jumbo loans require private mortgage insurance (PMI)?

Jumbo loans typically do not require private mortgage insurance (PMI), unlike conventional loans. This is because PMI is designed for conforming loans backed by government entities like Fannie Mae or Freddie Mac. 

However, since jumbo loans carry more risk, lenders may compensate with stricter requirements like larger down payments or higher interest rates.

Can I get a jumbo loan with an adjustable-rate mortgage (ARM)?

Yes, you can get a jumbo loan with an adjustable-rate mortgage (ARM). ARMs offer lower initial interest rates that adjust after a set period, typically 5, 7, or 10 years, making them an attractive option for jumbo loans. 

However, after the fixed period, the rate adjusts periodically based on market conditions, which could increase your payments. This option suits borrowers planning to sell or refinance before rates adjust.

How does my debt-to-income (DTI) ratio affect my jumbo loan application?

Your debt-to-income (DTI) ratio significantly affects your jumbo loan application, as it measures your ability to manage monthly payments. Lenders typically prefer a DTI below 43%, though stricter requirements may apply for jumbo loans due to their higher risk. 

A lower DTI indicates financial stability, making you a more attractive borrower and increasing your chances of approval and better loan terms.