Are you currently looking to purchase a home, and the price of the home is creating the need for a jumbo loan? If so, you'll need to know the following thing about jumbo house loans before you move forward

Determine If You Actually Need a Jumbo Mortgage

The first thing that you should do is figure out if you actually need to get a jumbo mortgage, or if you can get a standard conforming loan. This is because every county will have its own conforming loan limits based on the area, and that limit is always changing every year. While you may have needed a jumbo loan for your last home, you may find that it is not necessary based on where you are moving to.

In addition, you also need to consider how many units the property has, since that plays a role in the conforming loan limits as well. A single-family home is going to have a much lower conforming loan limit than a multifamily home that has four units. If you are buying a multifamily unit so that you can live in one and rent out the rest, you may be surprised to learn the conforming loan limits are different.

Ask About How Many Months of Reserve Funds You Need

Know that many lenders require you to have a certain amount of months worth of reserve funds to purchase a jumbo loan. They want to see that you are able to cover the mortgage in a worst-case scenario, and may look for as much as a year worth of mortgage payments in reserve.

Thankfully, you do not need to have your reserve funds in cash in order to get a jumbo loan. It's also possible to prove you have the money by showing balances of investment or retirement accounts that can be cashed out if necessary. The lender is simply looking to see if you have the money.

Know That Underwriting Is a Manual Process

A jumbo loan is not going to go through an automatic underwriting process to approve your loan. Someone is going to go through your financial history to manually approve your loan, and they are going to be much more critical of everything that they see. This includes looking at the consistency of your income over the years, what your expenses are, if you pay child support or alimony, and anything else that would be relevant to making those monthly payments.