85% LTV Jumbo Loans Versus 90% LTV Non-QM Mortgages
Non-QM Jumbo loans are more popular than traditional Jumbo mortgages due to lenient guidelines and no PMI
This Article Covers 85% LTV Jumbo Loans Versus 90% LTV Non-QM Mortgages.
Topics to be Covered in This Article:
In this article, we will discuss the following topics:
- What is the definition of jumbo loans
- Traditional jumbo loans
- Traditional LPMI jumbo loans
- 85% LTV jumbo loans
- Non-QM jumbo mortgages
- 90% LTV non-QM jumbo mortgages
Jumbo loans are home loans for higher-end properties. Lenders offering jumbo loans are specialty lenders. Jumbo loans are classified as riskier loans than traditional loan programs. This is due to the time it takes to foreclose and sell higher-end homes in the event it forecloses.
Higher Risk Factors on Jumbo Loans
It has always been very difficult to qualify for a traditional jumbo loan. Jumbo loans are for borrowers who want to purchase high-end homes. Jumbo mortgages are considered much riskier for lenders. It is not easy to liquidate a high-end home in the event of a foreclosure. It can take months or even years to liquidate a high-end luxury home.
Chicago Bull’s Michael Jordan’s Highland Park, Illinois mansion has been on the market for over a decade. It still did not sell. Therefore, lending requirements on jumbo loans are much more difficult than traditional homes. It only takes a few months to sell a 2,000 square feet home. However, this is not the case with high-end homes. Many self-employed homebuyers often had a difficult time qualifying for traditional jumbo loans. Now with the launch of non-QM jumbo loans, most self-employed borrowers can qualify for non-QM loans with alternative financing without income tax returns.
What are Jumbo Loans
A jumbo loan is a portfolio loan that exceeds the $548,250 loan amount.
Jumbo Loans are also called non-conforming loans. This is because they do not conform to Fannie Mae and Freddie Mac Mortgage Lending Guidelines. Fannie Mae and Freddie Mac cap all conventional loans to a maximum of $548,250 loan size. Any home loan greater than the $548,250 loan limit is considered a Jumbo Loan. Most jumbo lenders require a 75% loan to value for new purchases and refinance jumbo loans. Gustan Cho Associates offers non-QM jumbo loans with lower credit scores. We also offer non-QM jumbo loans with a 10% down payment.
Most lenders require an 80% loan to value traditional Jumbo Loans. Any mortgage loans over the 80% loan to value mark require private mortgage insurance with traditional Jumbo Mortgages.
Traditional LPMI Jumbo Loans
We now have a special product called LPMI 85% LTV Jumbo loans. LPMI stands for Lender Paid Mortgage Insurance and the borrower does not need to pay the monthly private mortgage insurance.
The private mortgage insurance premium is built into the rate. Current rates on 85% LTV Jumbo loans are higher than conforming mortgage rates.
Qualifications for 85% LTV Jumbo loans
To qualify for 85% LTV Jumbo loans, the borrower must have a minimum of a 740 FICO credit score, and have a debt to income ratio no greater than 41%, and must meet Freddie Mac underwriting guidelines.
- To qualify for 85% LTV Jumbo loans, the borrower must also have four months of reserves which can be cash, securities, or retirement accounts
- The new home needs to be their primary residence and the borrower’s assets, income, and liabilities are taken into account
The borrower cannot have any late on any mortgage payments in the past 12 months. No late payments on any credit account in the past 6 months.
Compensating factors for 85% LTV Jumbo loans
If borrowers do not qualify for 85% LTV Jumbo loans, we can take a look at your credit and financial profile and see what we can do to qualify them.
- If the borrower’s credit score falls below the 700 FICO credit score, we can see what we can do to boost the borrower’s credit score to hit the 700 FICO minimum credit score requirement
- It can be as simple as paying down a loaded up credit card and doing a rapid rescore
- If the debt to income ratio exceeds the 41% minimum debt to ratio requirements, a quick fix might be to pay off a credit tradeline or two or even an auto loan and then doing a rapid rescore
- We can probably use the asset-based income to qualify for additional income
- We can use 5% of your assets as additional income
Assets can be cash, pension, securities, retirement accounts, or other liquid investment accounts.
Non-QM Jumbo Mortgages
10% to 20% down payment meets the down payment requirement on non-QM jumbo mortgages. Down payment requirements are based on the borrower’s credit scores and the type of property. Unlike traditional Jumbo Loans, Non-QM Jumbo Mortgages credit score guidelines allow borrowers down to 500 FICO scores. Maximum Debt To Income Ratios allowed is 50% with compensating factors. PMI is exempt from all non-QM mortgages.
90% LTV Non-QM Jumbo Mortgages
Gustan Cho Associates also offers 90% LTV Non-QM Jumbo Mortgages. Non-QM Mortgages Credit Score Guidelines are down to 500 FICO. There is no private mortgage insurance required on Non-QM Jumbo Mortgages
Jumbo Bank Statement Loans For Self-Employed Borrowers Without Tax Returns
Self-Employed Borrowers with many unreimbursed expenses can now qualify for our Jumbo Non-QM Bank Statement Mortgage without the income tax returns required. 12 months of bank deposit averages determine the borrower’s monthly income. Withdrawals do not matter. Credit scores down to 500 FICO. The amount of down payment is dependent on the borrower’s credit scores. High-end homebuyers opting for non-QM jumbo loans with no maximum loan cap have no PMI.
For more information on this blog or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected]