If you plan to buy a home in a high-demand area in Florida, you may need a large mortgage preapproval amount to boost your buying power.

Finding your dream home in Florida’s most coveted areas—whether it's picturesque Boca Raton, vibrant Ft. Lauderdale, or luxurious Naples—requires more than just a vision. The competition for luxury homes can be fierce, and the stakes are high.

For example, the median prices for luxury homes in some of the most desirable areas of Florida for July 2024 include:

• Boca Raton/Delray Beach: $2,892,500
• Ft. Lauderdale: $5,485,000
• Naples: $5,500,000

A substantial mortgage preapproval amount is pivotal. Not only does it strengthen your purchasing power, but it also lets sellers know you are a serious buyer—someone who's ready to seize the right house when it hits the market.

Because jumbo loans offer higher borrowing limits than conventional loans, they're tailor-made for Florida property markets with higher price tags.

This guide will provide essential steps and tips to help you boost your jumbo mortgage preapproval amount, making it easier to secure your ideal home in Florida's premier locations.

Start your application with MIDFLORIDA Credit Union.

What is mortgage preapproval

Mortgage preapproval involves a lender evaluating your financial situation to determine how much you can borrow.

This number helps you understand your budget and proves to sellers that you are a committed buyer with the financial backing to complete the purchase.

How much can you get preapproved for?

Your preapproval amount is influenced by several factors that determine the maximum loan amount a lender may be willing to offer.

These factors include:

• Your income
• Credit score
• Debt-to-income (DTI) ratio
• Overall financial health

Let's take a closer look at how each factor impacts your preapproval amount.

Income

Your income is a critical factor in determining your mortgage preapproval amount.

Lenders must ensure you have a reliable and steady income to cover the monthly mortgage payments.

They consider all sources of income, including:

• Your salary
• Bonuses
• Commissions
• Other regular income

Credit score

Your credit score significantly influences your preapproval amount. Lenders use it to assess your creditworthiness and calculate your lending risk.

A higher credit score often results in better loan terms, including a larger preapproval amount.

Debt-to-income ratio (DTI)

Your DTI ratio indicates what portion of your monthly income is used to pay off debts.

Lenders prefer a lower DTI ratio because it shows you have adequate income for mortgage payments.

To increase your preapproval amount, focus on lowering your DTI by paying off existing debts or boosting your income.

Financial health

Lenders will also review your overall financial health, which includes:

• Savings
• Investments
• Other assets

A strong financial profile can mean a larger mortgage preapproval amount.

Using a different loan type: Jumbo loans

If you want to make the most of your purchasing opportunities, consider opting for a jumbo loan instead of a conventional loan below the “conforming” limit.

Jumbo loans cater to borrowers needing to finance properties above the conforming loan limits set by the Federal Housing Finance Agency (FHFA).

Key points about jumbo loans include:

• Higher borrowing limits: Ideal for financing high-value properties
• Stricter qualification criteria: Typically require a higher credit score and a lower debt-to-income ratio
• Larger down payment: Often necessitates a larger down payment compared to conventional loans
• Competitive interest rates: Despite the higher risk for lenders, jumbo loans can offer competitive interest rates

Higher borrowing limits

Jumbo loans allow you to access funds above and beyond the conforming loan limit, which in 2024 is $766,550 for single-family homes.

Depending on the property type, this limit can go up to $1,786,950 in high-cost areas like Monroe County (for a four-unit property).

A Florida jumbo loan can provide the extra funds needed to help you purchase your dream home in the Sunshine State.

Stricter qualification criteria

Due to the higher loan amounts, jumbo loans have more stringent qualification criteria.

You'll need:

• A higher credit score, typically above 700
• A lower DTI ratio
• Substantial cash reserves, often covering several months of mortgage payments

Larger down payment

Jumbo loans usually carry larger down payment requirements compared to conventional loans.

While the exact requirement can vary depending on the lender you decide to work with, it's a good idea to plan for a down payment of 20% (minimum) of your home's purchase price.

In addition to helping you qualify for a jumbo loan, a larger down payment:

• Reduces the loan amount
• Lowers your monthly mortgage payments

Competitive interest rates

Contrary to common belief, jumbo loans can offer competitive interest rates. While they may be slightly higher than conventional loans, the difference is often minimal.

With a strong financial profile, you can secure favorable terms, making jumbo loans an attractive option for financing higher-priced properties.

Strategies to increase your mortgage preapproval amount

To maximize your mortgage preapproval amount, consider the following strategies:

1. Improve your credit score
   1. Pay bills on time
   2. Reduce credit card balances
   3. Avoid new debt
   4. Review your credit report annually for mistakes and correct any discrepancies
2. Increase your income
   1. Seek higher-paying job opportunities
   2. Consider asking for a raise
   3. Take on additional work
   4. Ensure all sources of income are well-documented
3. Reduce your DTI ratio
   1. Eliminate outstanding debts such as credit card balances, personal loans, and car loans
   2. Free up more of your income to qualify for a higher mortgage amount
4. Save for a larger down payment
   1. Aim to accumulate at least 20% of the home’s purchase price
   2. A larger down payment lowers the required loan amount and shows financial responsibility
5. Showcase your financial stability
   1. Provide documentation of your savings, investments, and assets
   2. A strong financial profile reassures lenders of your ability to manage a larger loan

Start your application with MIDFLORIDA

Increasing your mortgage preapproval amount can be a game-changer in the Florida real estate market.

Armed with a MIDFLORIDA jumbo loan and implementing these strategies, you can take the steps necessary to secure the funds needed to purchase your dream home.

At MIDFLORIDA, we offer a range of mortgage options—including jumbo loans—designed to help you achieve your homeownership goals.

Start your application with MIDFLORIDA today using our easy-to-navigate online app.

Let us help you take the first step toward owning your ideal property. Your dream home is just a click away.

MIDFLORIDA Credit Union does not discriminate against credit applicants on the basis of race, color, religion, national origin, sex, marital or familial status, age (provided the applicant has the capacity to enter into a binding contract), disability, sexual orientation or gender identity; because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.  It is MIDFLORIDA’s policy to observe both the letter and the spirit of the law.