For many individuals and families, owning a home is a lifelong dream. However, with rising real estate prices, some may find themselves seeking financing beyond the conforming loan limit. This is when you may need to apply for a jumbo loan. So whether you’re looking to buy a home in Martinsburg or a townhome in Charles Town, let’s break down what a jumbo loan is in West Virginia, the 2023 conforming loan limits, and what’s needed to qualify for this type of loan.
What is a jumbo loan?
A jumbo loan in West Virginia is a type of mortgage that is used to finance homes that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). Oftentimes, this type of loan is necessary for high-end, luxury homes or homes located in expensive housing markets, like Seattle or San Francisco.
If the loan amount needed is more than the conforming loan limit (CLL), you’ll need a jumbo loan. West Virginia jumbo loans allow you to borrow more money to buy a more expensive home, but they also come with higher interest rates and stricter requirements than conventional loans.
What is the jumbo loan limit in West Virginia?
In 2023, the conforming loan limit for a single-family home in most markets is $726,200. However, in West Virginia counties where home prices are higher, the jumbo loan limit can actually be much higher.
- $726,200 is the conforming loan limit in most West Virginia counties
- $1,089,300 is the maximum limit in higher-cost counties
As a reminder, the loan amount is what determines whether or not you’ll need a jumbo loan, not the price of the home you’re buying. So, if you were to put $100,000 down on a $780,000 home in Berkeley County, the mortgage would be $680,000, which is under the CLL for this area. In this case, your loan wouldn’t be considered a jumbo loan.
The following counties in West Virginia have a conforming loan limit beyond $726,200 for 2023:
| County | FHFA Conforming Loan Limit |
| Jefferson County | $1,089,300 |
You can find more information on the conforming loan limits specific to where you’re looking to buy a home in West Virginia by using the FHFA map.
What are the requirements for a jumbo loan in West Virginia?
As previously mentioned, the requirements for a jumbo loan are much more stringent than a conforming loan. The specific requirements may vary from lender to lender, but below are the typical requirements for borrowers seeking a jumbo loan.
Higher credit score: In order to be eligible for a jumbo mortgage, lenders generally expect homebuyers to have a credit score of at least 720. While some lenders may consider a score as low as 660, a credit score of less than that is typically not accepted.
Larger down payment: Buying a high-priced home typically requires a larger down payment from the buyer. Conventional mortgages may offer programs for down payments as low as 3%- 5%, but jumbo loans require a minimum down payment of 10%, with some lenders requiring up to 30%. If the borrower puts down less than 20%, they will likely need to pay for private mortgage insurance (PMI).
More assets: To qualify for a jumbo loan, lenders require borrowers to demonstrate that they have sufficient liquid assets or savings to cover at least one year of loan payments. The exact amount of assets needed can vary depending on the lender and the size of the loan, but having more assets can increase the chances of approval and potentially lead to better terms and interest rates.
Lower debt-to-income ratio (DTI): When applying for a jumbo loan, West Virginia lenders typically look for a borrower with a debt-to-income ratio (DTI) below 43%. Ideally, a DTI closer to 36% or lower is preferred. The DTI is calculated by dividing the sum of all monthly debt payments by gross monthly income. A lower DTI signifies a borrower’s ability to manage their current debt load while taking on additional mortgage payments. It also indicates greater financial stability and the ability to make on-time payments towards their jumbo loan.
Additional home appraisals: Your lender may require a second home appraisal for a jumbo loan, in addition to the standard appraisal, to get another opinion on the property’s value. This is especially true in counties with limited comparable property sales. The additional appraisal helps lenders ensure that they are providing funds for a property that is worth the loan amount or more.
This post first appeared on Redfin.com. To see the original, click here.