Jumbo construction loans enable buyers to finance and build their luxury homes through the duration of construction. The construction to permanent loan (also known as “CP” loan for short) is designed for the time required to build your home and normally ranges from six months to a year.
These CP loans allow the convenience of having the construction loan combined with the standard mortgage. Doing this eliminates the need to refinance after construction and undergo two separate closings. This also saves the homeowner money by eliminating the closing costs of two separate loans.
Jumbo construction loans are for homeowners requiring higher loan amounts exceeding the regular conforming loan limit. In most U.S. locations the maximum 2023 conforming loan limits are set to $726,200. However, certain high-cost locations in California, Florida, DC, Colorado, New England permit higher mortgage limits of up to $1,089,300.
Note, that the program requirements below apply strictly to borrowers who wish to build on their own lot. Homebuyers who are purchasing a newly built home from a large production builder should review the regular Jumbo Purchase Loans. In most cases, newly built or “to be built” spec homes being sold by on-site builders are viewed similarly to regular purchase loan transactions and do not require special construction perm financing.
Borrowers that have questions can call the number at the top of their screen, or just submit the Quick Call Form on this page.
Jumbo construction programs are available for up to 90% financing. Loans amounts up to $3,000,000 are available for borrowers with a greater down payment. Please see the chart below.
Jumbo Construction Financing Highlights:
*Homeowners Building Owner Occupied Homes:
- Loans to $950,000: 10% down payment
- Loans to $1,250,000: 20% down payment
- Loans to $1,750,000: 25% down payment
- Loans to $2,500,000: 30% down payment
Jumbo Construction Features and Benefits:
- Building a second home is permitted with a 20% minimum down payment.
- Borrowers pay only interest during the construction period. Once construction is complete, the mortgage payment will automatically convert to normal principal and interest, saving you from the added expense of a second closing.
- The cost of the land can be included, buyers are not required to own their lot in advance.
- Varies fixed rate and adjustable rate terms available.
- Jumbo Refinance transactions are also eligible.
Jumbo Construction Mortgage Restrictions:
- Building investment properties are not approved.
- 700+ credit scores are needed when financing over 80% loan to value.
- Debt-to-income ratio limit is 43% when financing over 80% loan to value. Up to 50% DTI is permitted with a greater down payment.
- Borrowers should be able to fully document all income and assets (pay stubs, W2 and/or 1099) just the same as normal conforming loans.
- All Jumbo loans will require mortgage payment reserves. The “reserves” is the amount of assets a borrower has remaining after the down payment & closing costs obligations are met. In most cases, 9 months of reserve payments will need to be documented. The good news is most non-liquid assets like IRA or 401K can be used to fulfill this requirement.
We are available to answer questions 7 days a week. Please call the number above or just fill out the Quick Call Form on this page. Be sure to select Jumbo Construction as your loan type.