Jumbo Home Loans
By Gustan L. Cho
Mortgage loans that exceed Fannie Mae and Freddie Mac conforming mortgage lending limits of $417,000 is known as non-conforming mortgage loans or Jumbo home loans. After the 2008 housing market meltdown, Jumbo mortgage lenders took a major hit with the thousands of foreclosures. Many Jumbo mortgage lenders offered stated income/no doc Jumbo home loans as long as the home buyer had at least 20% down payment and it was fairly easy to get a Jumbo mortgage. Unfortunately, the historical high foreclosure rates affected the higher end homes and many of those homes plummeted more than 20% of their values during the real estate market collapse which left many Jumbo lenders losing millions if not billions of dollars.
After the housing collapse, Jumbo mortgage lenders eliminated the stated income/no docu mortgage lending program and all Jumbo mortgages and set extremely high credit and income standards. 25% down payment and 740 FICO scores and no greater than 40% debt to income ratios were the norm in order to qualify for a Jumbo mortgage post the real estate meltdown. Most Jumbo lenders also required that the Jumbo loan borrower have at least one year reserve. A bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale were not permitted in order to qualify for a Jumbo mortgage.
Risk For Lenders With Jumbo Home Loans
Jumbo Home Loans are viewed riskier in the eyes of any mortgage lender. Higher end homes are tougher to sell and takes longer to sell in the market place in general. It is also tougher to qualify for a jumbo home loans than a conventional mortgage loan or government loan such as FHA, VA, or USDA. There are cases where high end homes are listed in the market place for over a year without a single showing. Higher end homes are normally custom homes that are normally custom built to suit the homeowners needs. A home buyer who is qualified to purchase a high end home will be pickier on the home he or she chooses than a home buyer who only has a certain budget on a home purchase. A high end home buyer normally has the means to build his or her own home so the high end home he or she chooses has to be to his or her likings and tastes. If a jumbo lender forecloses on high end luxury home, the home can sit for a long time and due to these reasons, jumbo loans are considered riskier loans.
High Risk Means Higher Rates And Tougher Lending Guidelines
Since non-conforming, Jumbo, mortgage loans are considered high risk, most Jumbo lenders require a Jumbo loan applicant to have higher credit scores, lower debt to income ratios, lower loan to values, and reserves. Most Jumbo lenders have a 740 FICO score credit requirement, maximum 40% debt to income ratio cap, 80% loan to value, and one year of housing payment reserves which consists of principal, interest, taxes, and insurance. A large percentage of Jumbo lenders even have a 75% loan to value requirement.
2014 Special Jumbo Home Loans
We now have eased mortgage lending requirements to qualify for a Jumbo mortgage. We now offer Jumbo loans for high end home buyers with a minimum 660 FICO credit score. We also have a special 10% down payment Jumbo loan program with no mortgage insurance required. The 90% loan to value Jumbo mortgage loan program has tougher lending guidelines since the Jumbo mortgage investor has higher risk. To qualify for the 10% down payment Jumbo mortgage loan program, the mortgage loan applicant needs a 740 FICO credit score, maximum of 40% debt to income ratio, and no late payment history in the past 12 months. If you are a Jumbo mortgage home buyer in Illinois, Florida, California, Washington, Indiana, or Wisconsin and are interested in a 10% down payment Jumbo mortgage loan program, contact Neighborhood Loans at 800-289-1092.