Jumbo mortgages are loans for pieces of property that exceed mortgage-confirming limits, which start at $417,000 for most of the country and can be as high as $625,501 for higher-priced real estate areas. For someone seeking to buy an expensive piece of property that exceeds these limits, a jumbo mortgage is a viable option. However, since the amount of the loan is high, it is harder to qualify for a jumbo mortgage than for a traditional mortgage. An applicant needs a high income, low debt-to-income limit, high credit score and a relatively low down payment.

Even with these qualifications, a reported 23.5% of all mortgages in 2014 were jumbo mortgages, the largest percentage since these mortgages have been tracked. The trend has continued in 2015, with jumbo loans up 9.8% in the first quarter of 2015 compared with the first quarter of 2014.

Jumbo mortgages always garner more scrutiny than conventional mortgages. To qualify for a jumbo mortgage, a person needs to prove his income and liquid reserves can cover the monthly payments. Specific income levels and reserves depend on the size of the overall mortgage, but all borrowers need recent paystubs dating back 30 days and W2 tax forms stretching back two years to prove they have the necessary income.

If a person is self-employed, the income requirements are greater. Self-employed individuals need to show two years of tax returns and at least 60 days of current bank statements. They also need to prove they have the liquid assets to qualify and should come prepared with cash reserves equal to six months of the new mortgage payments.

Most jumbo mortgages are qualified mortgages, which is a lending system developed by the Consumer Financial Protection Bureau (CFPB) to standardize mortgage terms. If a person applies for a jumbo mortgage, he needs a debt-to-income ratio of less than 43%. If current debt limits are greater than 43% of income, it is possible to qualify for a nonqualified mortgage, but the lender needs to verify with further scrutiny that the loan can be repaid.

Credit score requirements are larger for jumbo mortgage applicants versus traditional mortgages due to the higher dollar value of the jumbo mortgage. An applicant needs an average credit score of 680 to qualify for a jumbo mortgage. However, lenders set their own credit score requirements, and some may require higher approval scores.

Qualified mortgage rules have increased the need for documentation. In the past, borrowers were approved for a jumbo mortgage with limited paperwork, but this is no longer the standard. When people apply for jumbo mortgages, they have to show proper documentation that includes proof of income from all s, proof of liquid assets, documentation on all loans held and proof of ownership of nonliquid assets such as other owned properties.

The application process and minimum requirements for a jumbo loan have gotten increasingly stringent over the years. However, down payment requirements have loosened over the same time period. In the past, jumbo mortgages often required down payments of 20 to 30%. In 2015, down payments of roughly 10% are needed for jumbo mortgages.

However, keep in mind a smaller down payment affects interest rates and the amount of the monthly mortgage payment. Interest rates can be higher on jumbo mortgages because of the larger amount of money involved and because it can take longer to sell a higher-priced home if the lender must foreclose on the property. Given these factors on interest rates and down payment size, it may be smart to put the traditional 20 or 30% down if it is financially possible.