What to Know About Financing a Luxury Home in New Orleans

When it comes to buying a luxury home in New Orleans, the process for financing is quite different compared to a traditional home. With more money involved, the risk is higher and the process can be much slower. Those seeking a luxury home without plans to pay cash will likely be seeking a jumbo home loan.

Defining a Luxury Home

A simple definition some use for a luxury home is any home over $1 million. However, the actual definition isn’t just about price and includes many homes not breaking the seven-figure mark.

Some of the most common characteristics of luxury homes in New Orleans include a very desirable location, plenty of community amenities, unique architecture and high-end home features. It’s best defined as any home going above and beyond the typical home on the market.

Start Your Loan Process Early

Unless you’ll be paying enough down to avoid needing a jumbo loan, you want to get the loan process starts as soon as possible. Jumbo loans can take quite a bit of time and getting the process started before you start shopping for a home is important.

What are Jumbo Loans?

Jumbo loans are non-conforming loans used to purchase more expensive, luxury homes. Conforming loans have limits set by Fannie Mae and Freddie Mac. Anything going above those limits will likely be considered a jumbo loan.

How to Qualify

Jumbo loans will have more stringent requirements compared to traditional home loans. You will likely need a credit score above 700 and a down payment of about 10% of the purchase price. You may be able to find a jumbo loan with a lower down payment if you have a very high credit score.

Some lenders dealing in jumbo loans will waive the private mortgage insurance even though you may not put 20% down. However, you will have to show a stable employment history, proof of income, proof of down payment funds and potential explanation of what you do for a living.

Along with these things you should know about financing for a luxury home in New Orleans you should also be prepared for higher closing costs, the possibility of two or three appraisals and a few other hoops you may need to jump through.