Jumbo mortgage rates for May 2021

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What Are Jumbo Mortgage Rates Today?

On Tuesday, May 18, 2021, according to Bankrate’s latest survey of the nation’s largest mortgage lenders, the 30-year average jumbo mortgage rate is 3.110% with an APR of 3.210%. The average 15-year jumbo mortgage rate is 2.360% with an APR of 2.430%.

Current Jumbo Mortgage Rates

Product Interest rate APR
30-year fixed rate 3.150% 3.300%
30-year FHA rate 2.890% 3.760%
AV rate over 30 years 2.750% 2.940%
30-year fixed Jumbo rate 3.180% 3.240%
20-year fixed rate 3.070% 3.220%
15-year fixed rate 2.430% 2.630%
15-year fixed Jumbo rate 2,440% 2,500%
ARM rate 5/1 3.020% 4.030%
Jumbo 5/1 ARM rate 2.740% 3.870%
ARM rate 7/1 3.020% 3.880%
Jumbo 7/1 ARM rate 3.070% 3.810%
ARM rate 10/1 3.220% 4.040%
Product Interest rate APR
30-year fixed rate 3.090% 3.300%
30-year FHA rate 2.910% 3.770%
AV rate over 30 years 2.710% 2.880%
30-year fixed Jumbo rate 3.110% 3.210%
20-year fixed rate 2.990% 3.160%
15-year fixed rate 2.360% 2.650%
15-year fixed Jumbo rate 2.360% 2.430%
ARM rate 5/1 3.160% 4000%
Jumbo 5/1 ARM rate 3.220% 3.900%
ARM rate 7/1 3.200% 3.900%
Jumbo 7/1 ARM rate 3.390% 3.880%
ARM rate 10/1 3.460% 4.120%

Prices as of Tuesday, May 18, 2021

What is a jumbo loan?

A jumbo loan is a mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). Since jumbo loans exceed conforming loan limits, they are often referred to as non-conforming loans. The federal government will not insure or service giant mortgages, so mortgages guaranteed by the Federal Housing Administration (i.e. FHA loans) must meet compliant loan limits.

In addition, the federally funded mortgage companies Fannie Mae and Freddie Mac will not serve or guarantee these loans. Since lenders cannot sell jumbo loans to Fannie or Freddie, they are considered riskier mortgages and generally have higher interest rates.

Jumbo loan conditions

The baseline Loan limit compliant with the FHFA for 2021 is $ 548,250 for single-family homes. In some high-cost areas, this limit increases to a maximum of $ 822,375. The loan limit varies by county and you can see the limit for your area using the Map of FHFA compliant loan limits.

Compliant loan limits for multi-unit properties are higher and cap at $ 1,472,550 for 4-unit properties located in high cost areas. Any property with more than four units is considered commercial property and requires a commercial mortgage.

Jumbo loan qualifications

Qualifying for a jumbo loan is more difficult than getting a conventional mortgage. The specific jumbo loan guidelines vary by lender, but you will need a larger down payment and a much higher credit score.

With a typical conventional mortgage, you might qualify with a credit score of 650 or higher. This is not the case with jumbo loans, where a minimum credit score of 700+ is usually required. Some conventional loans allow you to buy a home with only 3% down. But a standard down payment for a jumbo loan starts at 10% and can go up to 40% of the purchase price.

15-year and 30-year jumbo loans

Short-term 15-year mortgages generally have lower interest rates, and because you pay off the loan sooner, you’ll pay much less interest overall. For 30-year repayment terms, you’ll benefit from much lower monthly payments. So you can save or invest more in the short term, but you will have a mortgage payment for an additional 15 years.

By definition, jumbo loans are for much larger amounts, which means that the differences between a 15-year and a 30-year loan are much more pronounced. As you can see, a 15 year loan could cost you over $ 1,700 more per month, but save you over $ 220,000 over the life of the loan:

term of the loan Amount of the loan Interest rate Monthly payment Total cost of the loan
30 years $ 700,000 3% $ 2,951 $ 1,062,493
15 years old $ 700,000 2.5% $ 4,667 $ 840,174

How is the mortgage process different with a jumbo loan?

The steps you will take to qualify for a jumbo loan are similar to those you would take for other types of mortgages. You will need to pass a credit check, verify your income, and have the property appraised. But since the bank issues a much larger loan, the lending guidelines will be stricter.

In addition to needing more income to cover the larger monthly payment, you may need cash reserves to cover 12-18 months of payments. When you add the down payment and closing costs, it wouldn’t be unreasonable for a jumbo loan to require the borrower to have well over $ 100,000 in cash to qualify for the loan.

How To Find The Best Jumbo Mortgage Rates

Finding the best jumbo mortgage rates is all about finding the best lender. However, not all lenders offer jumbo loans. And because of the COVID-19 pandemic, fewer lenders are offering them. You may need to do more research to compare rates and find the best deal.

Finding the lowest possible rate for a jumbo mortgage can save you more money compared to conventional loans because these loans are very important. On a loan of $ 700,000 over 30 years, a simple reduction in the interest rate of 0.12% would save you approximately $ 45 per month and $ 16,000 over the life of the loan.

When comparing rates, also pay attention to any discount points the lender may have built into the rate. One point of reduction is an initial charge of 1% charged in exchange for a lower rate. For jumbo loans, these fees can end up being quite expensive. While the savings may outweigh the extra expenses in the long run, you’ll want to know what fees you’re paying, in order to see if that’s right for your situation.

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About Teresa G. Wilson

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