In this blog, we will cover and discuss qualifying for FHA jumbo loans with FHA High-Balance Lenders in New Jersey with no lender overlays and competitive rates. The minimum credit score guidelines to qualify for a 3.5% down payment home purchase FHA high-balance loan in New Jersey is set at 580. Many lenders in New Jersey have lender overlays on FHA jumbo loans. Mortgage rates on FHA jumbo loans in New Jersey are higher due to high-balance loan level pricing adjustments. Gustan Cho Associates has the most competitive rates on FHA jumbo loans in New Jersey.

FHA High-Balance Lenders in New Jersey Credit Score Requirements on FHA Jumbo Loans

If credit scores fall between 500 and 579, borrowers can still qualify for an FHA high-balance jumbo loan in New Jersey with a 10% down payment. The reason why home buyers with credit scores under 580 credit scores require a 10% down payment is that lenders view lower credit score borrowers as high risk. The higher borrower’s credit score is, the lower the interest rates are. Credit scores are associated with risk in the eyes of lenders. Mortgage lenders view lower credit score borrowers as having a higher chance of defaulting on their home loans.

How do FHA High-Balance Lenders in New Jersey Determine Rates on FHA Jumbo Loans

Having prior bad credit such as older unpaid collection accounts, prior late payments, prior bankruptcy, prior foreclosure, prior deed in lieu of foreclosure, or prior short sale do not have any bearing on mortgage interest rates. The sole determinant of interest rates is credit scores on FHA loans. Borrowers can have a prior bankruptcy and foreclosure. But as long as they have high credit scores, it will not affect mortgage rates.

FHA High-Balance Lenders in New Jersey With Low Pricing Adjustments on Property Types

Other factors in mortgage rates besides credit scores are the property type. For example, mortgage rates on condominiums and multi-family properties are higher on single-family homes. This is because mortgage lenders classify condominiums and multi-family units as higher risk. Also, second home and investment home financing have higher mortgage rates than owner-occupant home financing. This is because lenders view second home and investment home financing as higher risk. In the event homeowners face a personal financial crisis, the chances are less likely to default on their owner-occupant home than defaulting on their second home or investment home. This is the mentality of mortgage lenders.

FHA High-Balance Lenders in New Jersey For Under 620 FICO

Even though the minimum credit score requirement is 580 to qualify for a 3.5% down payment FHA jumbo loan in New Jersey, having higher credit scores is a plus. Mortgage underwriters really scrutinize borrowers with under 620 credit scores. First and foremost, borrowers with credit scores of 620 and under will definitely have higher mortgage rates. This is since lenders classify them as higher risk. Remember that lenders determine mortgage rates by credit scores.

FHA High-Balance Lenders in New Jersey With Competitive Rates

The lower the borrower’s credit score, the higher the mortgage rates. The lower borrowers’ credit score, the higher the risk is on how underwriters view borrowers. It is not just FHA high-balance lenders in New Jersey. All creditors will judge a loan application that way. Same with auto loans. The lower consumer credit scores, the higher the automobile interest rate will be.

FHA High-Balance Lenders in New Jersey For Manual Underwriting

Other factors of having a lower credit score are lenders may require verification of rent for borrowers who have lower than 620 credit scores. They may also require reserves as well.  Many lenders will not allow the mortgage loan applicant to get gift funds for their down payment if their credit scores are under 600.  The bottom line is if borrowers have lower credit scores, try to boost them up.

Get Pre-Approved FHA High-Balance Lenders in New Jersey With Lenient Guidelines

To qualify for an FHA loan with lower credit scores, please contact us at Gustan Cho Associates Mortgage at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Homebuyers can start the pre-approval process by clicking APPLY ONLINE NOW and completing the 4-page online application.  I will get alerted via email and I will contact you to go over the information and issue you a pre-approval letter.