At West Coast Mortgage Group we have may great loan programs, but it is important to understand the difference between jumbo loans and conventional loans as well as their benefits. First off, we will go over the different loan types and then you will hear specifically about the conventional and jumbo loan details and benefits.

VA loans are government backed and specifically designed for active or retired armed forces, veterans, and even coast guard or reserves may be eligible. This type of loan generally allows for a 0% down payment for those who qualify and the standout features of the VA loan program are competitive interest rates and no mortgage insurance requirements.

FHA loans are government backed and specifically benefit home buyers that might be credit challenged and are looking for a low down payment, as low as 3.5%, and more flexible income and credit requirements for their loan qualification. These loans have an extra upfront fee and mortgage insurance that is due monthly but in turn offer rates lower than their conventional counterpart. Another important feature to note is that FHA loans do have loan limits depending on where the property is located.

USDA loans are government backed as well and are specifically designed for homes located in “rural” areas. These rural areas are defined by the government, but many areas are included in the designation. These loans have certain income limit requirements and allow as low as 0% down payment. Although this loan type may also require mortgage insurance paid monthly, it is cheaper than other loan options.

Conventional loans are not government backed and do not have an extra upfront fee. This loan type is one of the most popular and allows for as low as 3% down payment. One of the most important things that separates this loan type from a jumbo loan is that it has loan limits, which depend on the location of the property. If you need a loan above your location’s conventional loan limit, you may need to look at a jumbo loan. Also, if you are planning on putting less than a 20% down payment, prepare for mortgage insurance that may need to be paid monthly.

Jumbo loans are not government backed loans and do not have an extra upfront fee. They are designed for people seeking a higher loan amount which may exceed the property’s conventional loan limit. There are many different jumbo loan programs and normally these loans require more than 10% down payment. Mortgage insurance may also be needed if you put less than 20% down payment. This loan type is considered stricter than others so it may be tougher to qualify.  

Now that you have had a brief overview of the different loan types, let’s focus in on the difference between jumbo loans and conventional loans. The first place we should focus is what will your estimated loan amount be? If the loan amount you desire is higher than your property’s local conventional loan limit, you should focus on a jumbo loan. Next is how much do you have available for a down payment. Conventional loans allow for a smaller down payment while jumbo loans tend to require higher down payments. There may be instances where you can choose to either go with a jumbo loan or a conventional loan, and then it will come down to which loan type has the better interest rate available. In some instances, jumbo loans may have better rates at that point in time and other times a conventional loan may a more competitive interest rate.

If you feel confused about different loan types or how to choose the best mortgage, that is what we are here for. It is definitely a science and all of our mortgage professionals will ask the right questions to help guide you through the process. The benefit of using a mortgage company like West Coast Mortgage Group is that we have access to a full list of loan types. Many other companies do not have “all access” and you may be forced into a mortgage loan that is not best for you and your future.

With over 15 years of home loan experience, West Coast Mortgage Group has mastered the art of helping clients through the loan process and delivering a 5 star experience. We are here to answer any questions you may have and our loan officers are here to assist you with your home purchase, mortgage refinance, or mortgage planning. Call us at any time for a free live consultation or schedule a meeting and we would be happy to help.