How jumbo loans can help home buyers and your builder business

Discover the lending option that enables a real estate agent or builder clients to afford luxury real estate, so you can keep closing homes. 


Tags: Best practices, Cash flow, Loans, Payments, COVID-19
Published: March 08, 2021

While COVID-19 has caused certain financial challenges, U.S. Bank is equipped to help people move forward with their financial goals. This is especially true for home buyers currently searching for higher-valued homes that fit their lives and budget. U.S. Bank jumbo loans are helpful options available for these buyers, by lending 10 percent down up to $900,000 to $1.25 million, depending on the program. This type of loan can make a big difference for some clients while also enabling real estate agents and builders to sell more homes.

For U.S. Bank client, Michele Joy, Vice President of Sales and Marketing at a home building company, jumbo loans have allowed buyers to continue purchasing homes during COVID-19, and helped businesses thrive. Read on for her story, plus more information on how the loan process works.


How jumbo loans help real estate agents and builders

While typical conforming loans have a limit of $548,250 in much of the US, jumbo loans have a higher limit that make it possible for some home buyers to afford luxury homes that otherwise might not be in their price range. Over the last several months, Michele has seen how this option has helped her home building company retain even more buyers.

Having the ability to suggest a jumbo loan product to qualifying buyers has made all the difference for our home building company and buyers in many of our communities with price points averaging $1 million dollars, says Michele. “The consistent offering of the jumbo loan product by U.S. Bank allowed us to continue selling and closing homes without missing a beat,” she adds.

In fact, when building was temporarily shut down in April and May of 2020 and construction had stopped, “we were still closing homes, in part because of the jumbo loan option for buyers. We did not miss a closing during the height of the pandemic,” says Michele.


How jumbo loans help buyers

While jumbo loans are good for businesses, they can also make a positive impact on buyers. Our sales team shared their knowledge of the program with buyers as an appealing financing solution, with fewer restrictions than some alternative banks, increasing the number of buyers who could participate. This ultimately led to an increase in sales.

For example, our building company recently had a home buyer at their Boulevard community in Dublin, Calif., who had just started new employment working for a large company with a signing bonus. This buyer had no history of bonus or Restricted Stock Unit (RSU) type of income, so the standard requirements to consider the bonus and RSU income had not been met. This meant they didn’t qualify using only base income, explains Michele. “Utilizing the jumbo loan program offered by U.S. Bank and the flexibility of portfolio lending, the buyers were qualified with a 10 percent down payment. This particular home buyer’s situation would not have been acceptable on any agency or any non-jumbo product,” she says.


Navigating the virtual landscape

While jumbo loans help realtors and builders make sales, COVID-19 has presented its own set of challenges for these businesses. In response to the stay-at-home guidelines and social distancing recommendations, Michele’s team changed their way of operating to keep business going strong.

“We did a major shift with our team to embrace virtual,” she says. “We have been working on ways to make the home shopping experience as simple and seamless for the buyer as possible.” This included setting up technology called MyTime that enables home buyers to visit and tour by themselves, and doing virtual appointments to walk buyers through homes being built for them.

“Working to ensure that we could interact with the customer virtually, by phone or safely in person was important to ensure we could continue to serve our buyers during these challenging times,” says Michele. In addition to jumbo loans, making these types of adjustments and accommodations in response to COVID-19 is a critical part of continuing business operations.

In addition, the U.S. Bank online application has allowed buyers to handle most of the loan process remotely, which Michele says has eased the process for her buyers – especially in the context of COVID-19.


Jumbo loan qualification and approval process

To be eligible for a jumbo loan, home buyers must have a high credit score. Typically, this means their FICO score is at least 740. Income requirements must be met, and financial information must meet a certain set of standards as well. In addition, the buyer’s debt-to-income ratio needs to be less than 45 percent. Finally, the property appraisal is required to support the home’s purchase price and the mortgage requested by the buyer. A mortgage loan officer can also help buyers figure out whether a traditional loan or a jumbo loan would serve them best in their situation and discuss mortgage rates.


Click here to learn more about jumbo loans offered through U.S. Bank.


U.S. Bank is not affiliated with the organizations mentioned in this publication unless otherwise notated. U.S. Bank is not affiliated with any real estate agent or builder. Opinions of home-building company representatives are their own and not those of U.S. Bank.