In this blog, we will cover and discuss the types of Jumbo mortgage loans that are available in today’s marketplace. We will discuss the traditional and non-QM Jumbo loan options borrowers have to choose from. For home buyers with higher net worth and income who are in the market to purchase a higher-end home, they may not qualify for a conforming mortgage loan. This is not because the home buyer’s credit is bad but because the mortgage amount they are seeking is higher than the $647,200 conforming limits. A conforming loan is a loan that conforms to Fannie Mae and/or Freddie Mac mortgage lending guidelines which is capped at $647,200. Any mortgage loan that are greater than $647,200 is called a non-conforming loan. Jumbo Mortgage falls in the non-conforming category. In this article, we will cover and discuss Traditional Versus Non-Conforming Jumbo Mortgage Loans.
- Conv
- FHA
- VA
- Jum/Non
- USDA
Traditional Jumbo Mortgage Lenders
Jumbo mortgage lenders have tougher mortgage lending guidelines than government and conventional mortgage lenders. The reason being is due to the higher risk involved with higher-end properties. In the event of a loan default, it will take longer to liquidate a Mac Mansion than it would a standard average home. Jumbo mortgage loans are home loans that are higher than $647,200. Jumbo Lenders expect stellar credit from traditional Jumbo borrowers. The lowest credit score to qualify for traditional Jumbo Mortgages is 700. For the best Jumbo Mortgage rates, the borrower should have credit scores north of 740.
Traditional Jumbo Mortgage Loans Lending Guidelines
Homebuyers can qualify for a conventional mortgage loan with a 3% down payment. However, that is different from Jumbo loans. Most lenders will require a minimum of 20% down payment. Many other lenders will want a 25% down payment. 30% down payment for Jumbo mortgage loans higher than $1 million. To get the best Jumbo mortgage rates, borrowers would need to put in a 25% down payment. This is because the larger down payment minimizes the risk to lenders. The more down payment down on a Jumbo mortgage, the lower the interest rate will be. The higher the credit score, the lower the interest rate. Multi-million dollar jumbo loans may require larger down payments.
10% Down Payment On Traditional Jumbo Mortgages
There are 10% down payments on Jumbo Mortgage loans. However, plan on paying higher interest rates on such a program. Also, to qualify for a 10% Jumbo mortgage loan borrowers need a credit score north of 740. Debt to income ratios not greater than 40% DTI. No bankruptcies, foreclosures, deed in lieu of foreclosures, or short sale in the past 7 years. Interest rates on Jumbo mortgage loans are generally higher than conventional loans. This is due to the risk factor the Jumbo mortgage lender is taking.
Conventional Loan Plus Second Mortgage On High-End Home Purchase
To take advantage of the lower down payment requirement and lower interest rate, a high-end home buyer can take out a conventional loan of $647,200 plus a second mortgage at the same time for a home purchase. The home buyer will need to check with the primary lender whether or not they will allow that. There is a loan to value requirement. Cumulative loan to value is referred to as CLTV. Many lenders will permit a home buyer to have a maximum CLTV of up to 90%. This means homebuyers take the first mortgage with a 10% down payment and get a second mortgage for the difference. The first mortgage will be capped at $647,200.
Non-Conforming Jumbo Mortgage Loans
Gustan Cho Associates offers non-QM Jumbo Mortgage Loans. There are Non-QM loans where there are no waiting period requirements after a housing event and/or bankruptcy. We also offer Jumbo Mortgages For Self Employed borrowers where there is no income tax required. We require 12 months of bank statements. Personal or business bank statements are allowed. If borrowers decide on using 12 months bank statement deposit averages, then 100% of deposits are averaged over 12 months and that figure will be borrowers’ monthly gross income. If business bank statement deposits are averaged, then 50% of deposits are averaged over the past 12 months and that figure is the borrowers’ monthly gross income. Withdrawals do not count. 10% to 20% down payment is required and the amount of down payment depends on the borrower’s credit scores. The lowest credit score for Non-QM Jumbo Mortgages allowed is 500 FICO. The higher the credit scores and the larger the down payment the lower the mortgage rates.
Jumbo Mortgage For Bad Credit Borrowers
I can help high-end home buyers who are seeking a Jumbo Mortgage with low credit scores. For homebuyers with credit scores under down to 500 FICO and debt to income ratio under 45% DTI, we can qualify borrowers for a Jumbo Mortgage. Home Buyers can contact us at Gustan Cho Associates Mortgage Group at 800-900-8569 or text us for a faster response. Or click APPLY NOW FOR JUMBO MORTGAGE and complete the 4-page online mortgage application. Or you can email us at gcho@gustancho.com.
