(Mortgage info – provided by Michelle Cellular Nose with Leeward Island Mortgage.com)
Loan Limit Tables for the USVI
Loan Limits are the maximum amount of money allowed to be lent for a particular kind of loan. Different types of loans have different limits. Below are the 2023 loan limits for the USVI, which are 10.9% higher than in 2022.
Conforming Loan Limits
Conforming loans must meet the guidelines set by Fannie Mae and Freddie Mac. If a mortgage exceeds the conforming loan limits then it is considered a jumbo loan.
$1,089,300 – Single-Family
$1,394,775 – Duplex
$1,685,850 – Triplex
$2,095,200 – Quadplex
FHA Loan Limits
FHA Loans are home mortgages insured by the Federal Housing Administration. FHA Loans let you get a home loan with a lower down-payment and relaxed credit score requirements. These limits are up in 2023 by
$472,030 – Single-Family
$604,400 – Duplex
$730,525 – Triplex
$907,900 – Quadplex
VA Loan Limits
If you qualify, veterans loans allow you to buy a house with zero money down.
$1,089,300 – All Home Sizes
HECM Loan Limits
Home Equity Conversion Mortgages (HECM) allow seniors to convert home equity into cash for unexpected expenses.
$1,089,300 – All Home Sizes
Is Qualifying for a Jumbo Mortgage Different?
Credit score requirements are about the same for conforming and jumbo: a credit score down to 680 generally gets you most available loan options, albeit with a higher rate than you’d get with a top-tier credit score of 780 or greater.
As for money left over after loan closing — often called reserves or post-closing liquidity — jumbo loans will be more stringent than conforming. Typically jumbo lenders want to see 12 months of reserves after the close, half liquid (in a checking or savings account), and half calculated from retirement assets. Conforming loan reserve requirements range from 0 to 12 months, depending on factors such as credit score, down payment, and DTI. Jumbo exceptions are available if your debt-to-income ratio is low and your down payment is high.
How Do Jumbo Rates Compare to Conforming Rates?
In the years following the financial crisis, federal regulations have impacted rate markets in such a way that has enabled banks to keep jumbo rates about the same as conforming rates.
- Gross income. Essentially, this means your base salary plus your bonus income, including self-employment earnings, part-time earnings, alimony, child support, disability, and Social Security benefits.
- Front-end ratio. Also known as the mortgage-to-income ratio, the front-end ratio is the percentage of your yearly gross income that you can dedicate toward paying off your mortgage every month. The four components of principal, interest, taxes, and insurance make up your monthly mortgage payment. As a rule, your front-end ratio should be less than 28% of your gross income.
- Back-end ratio. The back-end ratio calculates how much of your gross income is needed to pay your debts, such as credit card payments, outstanding loans such as car loans or student loans, or child support. This basically means if you pay $1,000 per month in debts and you make $2,000 per month, your back-end ratio is 50%. Most lenders suggest this ratio be less than 43% of your gross income.
- Credit score. Mortgage lenders use your credit score as part of their formula to determine your level of risk. If you have a low credit score, you can expect to pay a higher interest rate. It is important to pay attention to your credit reports if you want to purchase a property.
When you are trying to decide on a house, there are a few factors that you will have to consider.
- One is what your lender thinks you will be able to afford — which is calculated by your gross income, front-end ratio, back-end ratio, and credit score.
- Another factor is what type of house you want to live in, for how long, and what types of consumption you are willing to give up to afford it.