Alternative Financing For Jumbo Loans With NON-QM Mortgages

This BLOG On Alternative Financing For Jumbo Loans With NON-QM Mortgages Was UPDATED And PUBLISHED December 16th, 2019

Alternative Financing For Jumbo Loans
Gustan Cho Associates

Jumbo Loans are also called non-conforming loans due to the fact that they do not conform to Fannie Mae and Freddie Mac lending guidelines on maximum loan limits.

  • Conventional loans, Freddie Mac and Freddie Mac, are conforming loans
  • It is called conforming loans because they need to meet conventional loan lending guidelines set by Fannie Mae and Freddie Mac
  • Fannie Mae and Freddie Mac are the two mortgage giants in the United States
  • Fannie and Freddie sets its own lending guidelines
  • Lenders who originate and fund conventional loans need to conform to these two mortgage giant lending guidelines
  • In order to be able and want to sell conforming loans they originate and fund to Fannie Mae and Freddie Mac, it needs to conform to Fannie/Freddie Guidelines
  • Maximum conventional loan limits is $453,100 unless the property is located in a high cost areas
  • Many counties in California is high cost areas
  • Fannie Mae and Freddie Mac have higher loan limits in high cost areas

Lending Requirements On Jumbos Versus Alternative Financing For Jumbo Loans

What are the Lending Requirements On Jumbos Versus Alternative Financing For Jumbo Loans

Jumbo Mortgage Lenders have their own lending requirements on traditional Jumbo Loans.

  • Any home loans higher than $453,100 loan amount is considered non-conforming or jumbo loans
  • Most Jumbo Lenders have their own lending guidelines with regards to credit scores, loan to value, and debt to income ratios
  • In general, most jumbo lenders require 20% down payment, 700 credit scores, and debt to income ratios no greater than 40% DTI
  • Most jumbo lenders require at least a 7 year waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale
  • Jumbo lenders also may require reserves 
  • Mortgage rates on Jumbo Loans are much higher than conventional loans
  • Normally, Jumbo Loans have rates that are 0.50% higher than conventional loans

Specialty Alternative Financing For Jumbo Loans

Which means Specialist alternative financing for large loans

There are 15% down payment and 10% down payment Jumbo Loan Programs available.

  • However, borrowers need to realize that the higher the loan to value on a home purchase the higher the mortgage rates
  • The higher the risk  the lender has, and with higher loan to value, the higher the risk
  • This means higher mortgage rates
  • To get the best jumbo mortgage rates, borrowers need 25% down payment, 75% loan to value, and a 740 credit score
  • Borrowers can qualify for a jumbo loan with 10% down payment and lower credit scores but need to realize that mortgage rates will be higher

Alternatives To Jumbo Loans With Non-QM Loans And Second Mortgages

What are the alternatives to large loans with non-QM loans and second mortgages?

Home buyers interested in purchasing a higher end home and need a jumbo loan, there are alternative to jumbo loans Gustan Cho Associates Mortgage Group has to offer:

  • NON-QM Loans are portfolio loans with no loan limits
  • There is no waiting period after bankruptcy and/or housing event to qualify for NON-QM Jumbo Mortgages
  • NON-QM Jumbo Mortgages are a great Alternative Financing For Jumbo Loans for borrowers with less than perfect credit scores, prior bankruptcy and/or foreclosure, and self employed borrowers who do not want to provide their income tax returns
  • NON-QM Jumbo Mortgages for self employed borrowers are for self employed borrowers who just want to use their bank statements
  • No income tax returns are required
  • Two years bank statement deposits are averaged and the monthly average is used as borrowers monthly income
  • Up to 50% debt to income ratios
  • No private mortgage insurance required
  • Verification of Rent is mandatory
  • 10% to 20% down payment is required
  • The amount of down payment is dependent on borrowers credit scores
  • The higher the down payment and higher the credit scores, the lower the mortgage rates

Gustan Cho Associates offers adjustable rate mortgages and 30 year fixed rate mortgages on non-qm jumbo mortgages for self employed borrowers. NON-QM Mortgages for W2 wage earners are home loans with no waiting period after bankruptcy and/or foreclosure. Late payments and derogatory credit is acceptable.

Alternative Financing For Jumbo Loans With Piggyback 80-10-10 Mortgages

What does alternative financing look like for large loans with mortgage 80-10-10 Mortgages

Home buyers can get a FHA Loans and/or Conventional Loan up to the maximum loan limit and then get a second mortgage or Home Equity Line Of Credit ( HELOC ) from a bank up to 90% CLTV ( Cumulative Loan To Value ). This is called a Piggyback 80-10-10 Mortgages :

  • For example, home buyers who want to purchase a $600,000 home can get a first mortgage of $453,100 conventional loan
  • They would need a 10% down payment or $60,000
  • This is because most second mortgage lenders will require a loan to value no greater than 90% Loan To Value
  • The difference between $540,000 and $453,100 or $86,900 will be a second mortgage or HELOC from second mortgage lender

Second Mortgages And HELOC

What Second Mortgage and HELOC mean

Most first mortgage lenders do not originate and fund second mortgages and home equity lines of credit.

  • However, the first mortgage lender will refer borrowers to a second mortgage lender
  • Most second mortgage lenders are banks and credit unions
  • They have their own lending guidelines on second mortgages and home equity lines of credit
  • In general, second mortgage lenders will require a minimum credit score of 680
  • They may require at least a 7 year waiting period after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale
  • Most debt to income ratios required by second mortgage lenders is capped at 43% DTI

Home buyers who need alternative financing for jumbo loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Borrowers can also email us gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.

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