According to some recent data, millennials (the media’s favorite term for people in their 20s, and sometimes early 30s) are becoming a powerful home buying demographic. And as more of them are buying homes, many are also starting to ask about using jumbo loans to fund their purchases. Here’s how we know.
The Wall Street Journal reports that while homeownership rates have declined over the past year among middle aged adults, it has actually increased among adults ages 25 to 34; this is information that the Journal obtained via data from the U.S. Census Bureau. Plus, a new Zillow survey reports that 36 percent of renters in the millennial age group expect to purchase a home within the next year.
Furthermore, a recent National Association of Realtors report reveals that millennials are now the second-largest group of recent home buyers; the age group now accounts for 28 percent of all home buyers in the United States. The only demographic of home buyers larger than millennials is the “Generation X” group, which is the term normally applied to people born in the 1970s and 80s.
So, why are we talking about this? Because at Wholesale Capital Corporation, we welcome millennials who are qualified mortgage applicants. As a matter of fact, we also welcome millennials to apply for jumbo loans if they meet income and credit qualifications.
What is a jumbo loan? It’s a home loan that exceeds the threshold of conforming loan limits, a figure which varies by county. In the counties of Riverside and San Bernardino, jumbo loans start at $417,000; in Orange County and Los Angeles County, jumbo loans start at $625,500, and in San Diego County, they begin at $546, 250. Qualified jumbo loan borrowers are applicants who can prove that they make roughly three times the principal, interest, taxes and insurance (PITI) payment on the loan, in addition to meeting our credit requirements. For information on credit requirements, applicants should ask their WCC loan officer.
Why Millennials are Buying Homes
There are a number of factors that may be contributing to the millennial home buying wave. People in their 20s and 30s have very different lives today than they did in decades past, and that has led more of them to ask, “Is it time for me to buy a home?” For example, millennials are noticing that:
Rent payments are higher. In some markets – Southern California in particular – monthly rental payments and monthly mortgage payments are nearly equal. If it costs just as much to rent as it does to buy, then buying a home just makes sense to the highly educated millennial population, particularly those who are already raising families.
Homeownership matters. Millennials understand the value of homeownership, particularly if they are part of the growing echelon of high earners in that age group. Thanks to the tech boom and other innovations in the new economy, the share of millennials who earn six figures or more is growing with each passing year – and of course, they want the social status, tax benefits and other advantages of owning a home.
More property investment options. Young professionals now have more options than ever for investing in residential property. Many are purchasing homes to rent out, whether it’s to full time tenants or to temporary renters through travel-based, “sharing economy” websites like Airbnb. If the rentals are in higher priced metro areas, then it is only natural for younger buyers to start asking, “What is a jumbo loan, anyway – and how can it help me buy this investment?”
Millennials who are interested in purchasing a high value home with a jumbo loan can contact Wholesale Capital Corporation to inquire about their options. Contact us at (855) 640-2020 to speak with a WCC loan officer.
Wholesale Capital Corporation is not affiliated with or acting on behalf of or at the direction of the Federal Housing Authority (FHA), the Department of Veterans Affairs (VA), or any government agency or government-sponsored entity. WCC is licensed by the California Bureau of Real Estate, Broker License #01147747 and CA Finance Lender’s License #603K610. Also licensed in Arizona by the Arizona Department of Financial Institutions, MB #0926199. Equal housing lender.