High Credit Homebuyers Having Trouble Getting Jumbo Mortgages

The Boston Globe ran a good article on the spreading impact of the tightening of mortgage credit. Residents in Massachusetts, even those with good credit, are having a much harder time getting jumbo loans or are getting loans are significantly higher rates. The rate on jumbo loans increased by 75 basis points (3/4 of a percent) in the last week. Jumbo loans are loans above the $417,000 purchasing limit of Fannie Mae and Freddie Mac. Lenders have become increasingly concerned about mortgages that they can't sell off to either of these agencies.

Another part of the article that I found interesting was where it discussed one homebuyer who was having trouble getting a home. It mentioned that he was surprised even though he only planned to put down 5% of the purchase price. Is it just me or does that seem like a paltry payment? Wouldn't he have to pay PMI? It seems to me that if you want to buy a home you should be willing to put down at least 10% if not 20% of its value.