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What is a jumbo mortgage and how do you qualify?

A jumbo mortgage is a home loan for an amount that exceeds conforming loan limits established by regulation. The limit is $417,000 in most of the United States but is $625,500 in the highest-cost areas.

There are 3,143 counties in the United States (if you count Alaska’s boroughs, Louisiana’s parishes and the District of Columbia as counties, and exclude Guam, the Virgin Islands and Puerto Rico). Here’s the loan-limit breakdown for 2016:

• 2,916 counties have a limit of $417,000.

• 108 counties have a loan limit of $625,500. These are the highest-cost housing markets, such as Los Angeles, New York City and San Francisco.

• 115 counties have loan limits higher than $417,000 and lower than $625,500. These housing markets have higher-than-normal prices but not as high as, say, Los Angeles. An example is Denver County, Colorado, with a loan limit of $458,850.

• 4 of Hawaii’s five counties have limits between $657,800 and $721,050. (Limits are allowed to be higher in Alaska, Guam, Hawaii and the Virgin Islands under a long-standing regulation.)

Qualifying for a jumbo mortgage

The underwriting process for jumbo mortgages is similar to that of a conforming mortgage, except that jumbo lenders sometimes require two appraisals instead of just one.

Down payment requirements differ in many cases. Jumbo loans generally require higher down payments — depending on the lender, the minimum down payment could be 15 percent, 20 percent or 30 percent for home purchases.

Many lenders require a credit score of 700 or higher, a debt-to-income ratio of 43 percent or less, and six to 12 months’ worth of reserves.

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