Midland Jumbo Loan Down Payment and Qualifying Requirements

When looking to buy a home in Midland, or anywhere in Texas, one term you may encounter is “Jumbo mortgage.” These are loans that exceed the conforming loan limits set by federal agencies like Fannie Mae and Freddie Mac, making them different from standard conforming loans.

Understanding jumbo home loans is crucial if you’re planning to purchase a luxury home or a higher-priced property, as Midland’s real estate market can be quite competitive. In this post, we’ll dive into what jumbo loans are, how they differ from conforming loans, their pros and cons, and available low down payment options.

What is a Jumbo Mortgage in Midland?

Jumbo loans, also known as non-conforming loans, are mortgages that exceed the loan limits set by the Federal Housing Finance Agency (FHFA). The limit varies by location and can fluctuate each year based on the housing market. In areas with higher home values, such as some parts of Texas, jumbo loans are often required for larger home purchases.

For Midland County and the rest of the Texas, the conforming loan limit for single-family homes is $806,500 in 2025. If you’re looking to purchase a property that exceeds this threshold, you’ll need a jumbo loan to finance the home.

Difference Between Conforming Loans and Jumbo Loans

The key distinction between conforming and jumbo loans is the amount of money being borrowed. Here’s how they differ in more detail:

Conforming Loans

Conforming loans adhere to the loan limits set by Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that buy and back mortgages to promote homeownership.
The 2025 conforming loan limit for Midland County is $806,500 for a single-family home.
Conforming loans have standardized underwriting guidelines and lower risk, which allows lenders to offer them at lower interest rates.
These loans are insured or guaranteed by federal agencies, making them less risky for lenders.
Borrowers with conforming loans generally enjoy more favorable terms, including lower down payments, interest rates, and less stringent credit score requirements.

Jumbo Loans

Jumbo loans exceed conforming loan limits and are not backed by Fannie Mae or Freddie Mac.
They involve larger loan amounts, and lenders take on greater risk since the federal government does not guarantee these loans.
Jumbo loans often come with stricter underwriting criteria, such as higher credit score requirements and larger down payments.
Interest rates on jumbo loans can be higher than on conforming loans, though this isn’t always the case, especially if you have excellent credit.
Borrowers typically need to show more extensive documentation regarding their income, assets, and financial stability to qualify.

While jumbo loans may require higher down payments and stricter qualifications, they offer an option for buyers in markets like Midland, TX, where home prices can be above the conforming limit.

Pros and Cons of Jumbo Mortgages

Before applying for a jumbo loan, it’s essential to weigh the advantages and disadvantages.

Pros of Jumbo Mortgages:

Higher Loan Amounts: Jumbo loans allow buyers to purchase more expensive homes than conforming loan limits permit.
Flexible Property Types: You can use a jumbo mortgage to finance various types of properties, such as vacation homes, investment properties, or luxury residences.
Potential for Competitive Rates: While jumbo loans used to come with significantly higher interest rates, the gap has narrowed in recent years. With excellent credit, you can sometimes secure the same rates as conforming loans.
No Private Mortgage Insurance (PMI): Many jumbo loans don’t require PMI, even if you put down less than 20%, which can be a significant financial benefit for buyers.

Cons of Jumbo Mortgages:

Stricter Qualification Standards: Lenders have higher standards for credit scores (typically 700+), debt-to-income ratios, and financial documentation.
Higher Down Payments: While it’s possible to find jumbo loan programs with lower down payments, some banks and lender still require at least 20% down.
Larger Cash Reserves Required: Lenders may ask you to have more cash reserves in savings to qualify for a jumbo loan, adding to the financial burden.

Low Down Payment Options for Jumbo Loans

One common misconception about jumbo loans is that they require massive down payments of 20% or more. While this used to be the norm, many lenders today offer more flexible down payment options for jumbo loans, including as little as 10% or even 5% down. Let’s take a closer look at these low down payment options:

10% Down Jumbo Loans

Many lenders offer jumbo loans with only 10% down, which is great for buyers who want to conserve their savings.
With a 10% down payment, you may be able to avoid PMI, depending on the lender and the specific loan program.
Borrowers need to meet stricter credit requirements for 10% down jumbo loans, often requiring a credit score of 700 or higher.
Your debt-to-income (DTI) ratio will also need to be within acceptable limits, typically under 43%.

5% Down Jumbo Loans

While less common, some lenders offer jumbo loans with only 5% down. These are typically reserved for borrowers with excellent credit (above 720) and low debt-to-income ratios.
A 5% down jumbo loan can help you get into a high-priced home with less upfront capital, but you will likely face higher interest rates and stricter underwriting requirements.
With a 5% down payment, lenders may require you to have significant cash reserves, and some may charge higher fees or interest rates to offset the risk.

Requirements for Low Down Payment Jumbo Loans

When opting for a jumbo loan with a low down payment, keep in mind that the lender may have higher requirements to compensate for the smaller down payment. Some of these requirements might include:

Higher Credit Score: Borrowers with low down payment jumbo loans need excellent credit, usually 700 or above for 10% down, and 720+ for 5% down.
Debt-to-Income Ratio: Your DTI should ideally be below 45%, though some lenders may accept higher ratios if you have compensating factors like substantial cash reserves.
Strong Income and Asset Documentation: Lenders will require full documentation of your income, employment, and assets to ensure you have the financial stability to handle a jumbo mortgage.
Cash Reserves: Many lenders will want to see that you have significant cash reserves, sometimes up to 12 months’ worth of mortgage payments, in your savings and/or investment accounts.

Conclusion

Jumbo loans can be a great option for homebuyers in Midland who need to finance a property that exceeds the conforming loan limit of $806,500. With options for low down payments—such as 10% or even 5%—jumbo mortgages are more accessible than ever for buyers with strong credit and financial standing.

However, before jumping into a jumbo mortgage, it’s important to understand the pros and cons. While jumbo loans allow you to finance a more expensive property, they come with stricter qualification requirements, potential for higher interest rates, and often a requirement for larger cash reserves.

If you’re considering a jumbo loan, it’s crucial to work with an experienced lender who can guide you through the process and help you find a loan that meets your financial needs. Whether you’re purchasing or refinancing, jumbo loans offer flexibility and access to the financing required for larger home purchases. Contact Jumbo Loan Center today by calling the number above, or just submit the Quick Call Form here.