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Building Big: What Qualifies as a Jumbo Construction Loan in Florida?
While Florida has some of the most luxurious homes and properties in the world, there’s a chance it doesn't have one that perfectly suits you.
Whether it’s the location, the layout, or something as small as how the sunlight hits the bedroom in the morning, it’s just missing that essential spark of ‘you-ness.’
Sometimes, you have to build the right property yourself. If that’s what you need to do, then you need to know about jumbo construction loans in Florida.
Jumbo construction loans, Florida-style
Building a custom or luxury home in Florida is a significant investment that often requires financing beyond conventional loan limits.
Based on data from the Census Bureau, the median cost to contract a new home construction in 2023 was $400,700.
However, many high-end projects in Florida go well beyond this figure, requiring specialized financing—hence, the jumbo construction loan.
In this article, we’ll cover what qualifies as a jumbo construction loan in Florida and the key details you need to know before applying.
Start your application with MIDFLORIDA Credit Union.
What is a jumbo construction loan?
This type of construction loan is financing that covers the costs of building a home when the loan amount is more than conforming loan limits.
For 2024, the conforming loan limit—as set by Freddie Mac and Fannie Mae—for single-family homes in most of the U.S. is $766,550. Any loan amount above this threshold is considered a jumbo loan.
Jumbo construction loans are typically used for high-end, custom-built homes or properties in expensive real estate markets.
Unlike traditional mortgages, which finance the purchase of an existing home, a jumbo construction loan covers the cost of the land (if it hasn’t been purchased) and the construction cost.
Once construction is completed, the loan can often be converted into a permanent mortgage.
What qualifies as a jumbo construction loan in Florida?
Your project’s total loan amount must exceed the conforming limit to qualify for a jumbo construction loan.
As we mentioned, in Florida, you’ll need a jumbo construction loan if your project requires financing that exceeds the conforming loan limit of $766,550.
Given that real estate prices in many areas of Florida—such as Miami, Tampa, and Naples—are higher than the national average, many custom home projects in these markets require jumbo financing.
Whether you're building a luxury home in an upscale area or investing in a large-scale custom project, a jumbo construction loan is likely the right choice for financing.
Where to find a jumbo construction loan lender in Florida
Not all lenders offer jumbo construction loans since they’re considered riskier than conventional loans. However, many Florida-based banks, credit unions, and private lenders specialize in these loans.
MIDFLORIDA is a top choice for securing jumbo construction loans in Florida.
With competitive terms and a thorough understanding of the state’s real estate market, we offer tailored loan options for custom home construction.
Our comprehensive local knowledge is key to navigating the application, approval, and disbursement construction processes.
Let’s look at what else you should consider when choosing a lender.
Start with local lenders
Regional banks and credit unions are often familiar with the nuances of the Florida real estate market and offer jumbo construction loans tailored to the area.
Seek referrals from builders
Many builders establish relationships with lenders who specialize in construction loans and can recommend trusted institutions.
Look for lenders experienced in construction loans
Given the complexities of construction financing and the larger sums involved with jumbo loans, it's essential to choose a lender experienced in this area.
Do jumbo construction loans require PMI?
Unlike conventional loans, jumbo construction loans do not require private mortgage insurance (PMI), even when the down payment is less than 20%.
This is because jumbo loans don’t follow Fannie Mae or Freddie Mac guidelines, where PMI is typically mandated for low down payment loans.
Instead, lenders reduce their risk through other means, including:
- Higher down payments: Most lenders require a downpayment of 20% to 30% for jumbo construction loans.
- Stricter financial qualifications: Borrowers must meet more stringent financial requirements, such as:
○ High credit scores
○ Low debt-to-income ratios
○ Substantial cash reserves
While PMI isn’t necessary, the higher down payment and stricter qualification requirements ensure that borrowers are financially stable and invested in the project.
How to qualify for a jumbo construction loan
Qualifying for a jumbo construction loan in Florida involves meeting stricter financial criteria than traditional loans.
Here are the key requirements:
- A solid credit score, generally 700 or above, is usually necessary to qualify for a jumbo construction loan.
- A substantial down payment, typically ranging from 20% to 30%, is required to help minimize the lender's risk.
- A debt-to-income (DTI) ratio of 43% or lower ensures lenders that borrowers can comfortably manage loan payments.
- Lenders commonly require borrowers to have six to 12 months of mortgage payments in reserve to cover any unexpected costs during construction.
- Borrowers must provide detailed documentation of income, assets, and employment to demonstrate their financial ability to manage the larger loan amount.
What is the jumbo construction loan process?
The process for securing a jumbo construction loan involves several steps, similar to a standard construction loan, but with additional requirements due to the larger sums involved.
Pre-approval
Start by getting pre-approved with a lender like MIDFLORIDA. This step allows you to assess how much you can borrow and the terms you may be eligible for based on a review of your financial documents.
Select the land and builder
Once pre-approved, choose the land and a reputable builder. Lenders will typically require you to work with a licensed contractor who has experience in large-scale projects.
Loan approval and closing
After you submit your application, the lender reviews your financials and construction plans. Upon approval, the loan will be underwritten and then closed once terms are agreed upon, and funds will be disbursed in stages as construction progresses.
Conversion to permanent loan
Once the home is completed, the jumbo construction loan usually converts into a permanent mortgage, streamlining the financing process.
Explore jumbo construction loan options with MIDFLORIDA
Building a luxury home in Florida requires careful planning and the right financing.
A jumbo construction loan can provide the needed funding, but it’s important to understand the requirements and application process.
Our team can guide you through the process and ensure your project is funded from start to finish.
Start your jumbo construction loan application with MIDFLORIDA today.
