Jumbo Loans With Low Credit Scores

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will cover and discuss qualifying for jumbo loans with low credit scores. Jumbo loans are mortgage loans with higher than conforming loan limits. Gustan Cho Associates now offers jumbo loans with low credit scores. Jumbo loans with low credit scores are often referred to as non-QM jumbo mortgages. Jumbo loans in general are considered riskier loans. Therefore, jumbo loan lenders will have higher rates on jumbo loans versus traditional conventional loans. It is harder to liquidate a higher end home versus a median priced track home in the event the borrower forecloses. 

Jumbo Loan Lenders

What Are Jumbo Mortgages

There are no specific agency guidelines on jumbo loans. Jumbo loan lenders set their own lending requirements on jumbo mortgages. Jumbo loans are portfolio loans which mean lenders will hold the loan inhouse or sell them to specific financial institutions besides Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac will not buy mortgages that exceed the maximum conforming loan limit. Buyers of jumbo loans are hedge funds, insurance companies, and other large financial institutions.

Jumbo Loan Credit Score Requirements

Until recently, borrowers needed over 700 FICO credit scores, low debt to income ratios, stellar credit, and no bankruptcies and/or housing events in the past 7 years to qualify for jumbo mortgages. The emergence of non-QM and alternative financing loan programs in the past two years has been a major hit. This holds true for borrowers looking to get qualified for mortgages with bad credit and low credit scores. Right after the 2008 housing and banking meltdown, jumbo loans came to an abrupt halt. Many higher-end home buyers looking for jumbo loans with low credit scores could not get financing. Now, higher-end home buyers can qualify for Non-QM Loans With Low Credit Scores and Bad Credit. In this blog, we will discuss qualifying for non-QM loans with low credit scores and bad credit.

What Are Jumbo Mortgages

Conforming Loans are conventional loans that conform to Fannie Mae and/or Freddie Mac Mortgage Guidelines with a maximum loan limit of $548.250. Any residential home loan with a higher than a $584,250 loan limit is called and referred to as non-conforming loans and/or jumbo loans. Jumbo loans are considered riskier than government and conventional loans by mortgage lenders. It takes much longer to sell and liquidate a higher-end home than a traditional average home if borrowers foreclose. Due to this risk factor, jumbo loans had much tougher lending guidelines than government and conforming loans. Higher risk by lenders means higher mortgage risks and higher lending standards. Mortgage rates on jumbo loans are higher than conforming mortgage interest rates. The good news is that Gustan Cho Associates Mortgage Group now offers non-QM Loans with low credit scores and bad credit.

Eligibility Requirements To Qualify For Jumbo Loans With Low Credit Scores

As mentioned in the above paragraph, jumbo loans are considered higher-risk investments by lenders. Lower credit scores by borrowers also add another layer of risk to lenders. To qualify for Non-QM Loans With Low Credit Scores and bad credit, lenders want to see skin in the game by borrowers. Gustan Cho Associates has investors who will qualify and approve borrowers on Jumbo Loans with credit scores down to 500 FICO. However, to qualify for Jumbo Mortgage with 500 credit scores, a 25% down payment is required. The larger the down payment, the more skin in the game borrowers has. The more the home buyer puts down on a home purchase, the less of a likelihood the homeowner will want to give the home up and let it go to foreclosure.

Other Non-QM Jumbo Mortgage Programs

Non-QM Jumbo Mortgage Programs Gustan Cho Associates has traditional and non-QM jumbo loan programs with a 10% down payment. To qualify for a 10% down payment on traditional jumbo loans, a 660 FICO credit score is required. The higher the borrowers’ credit scores, the lower the risk level lenders have. This is why higher credit score borrowers can qualify for jumbo loans with a 10% down payment. Borrowers can definitely qualify for non-QM loans with low credit scores and bad credit with credit scores down to 500 FICO. The lower the credit score, the higher the down payment is required. Borrowers with 660 credit scores can qualify for 10% down payment traditional jumbo loans with no private mortgage insurance at Gustan Cho Associates. Borrowers who need to qualify for non-QM jumbo loans with bad credit, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected]

One of the newest traditional jumbo home loans Gustan Cho Associates offer is the 90% LTV jumbo mortgage. The minimum credit score required is 660 FICO and the maximum debt to income ratio cap is 50% DTI. Reserves are based on the borrower’s credit scores.

Jumbo Home Loans Mortgage Options In High-Cost Areas

As Americans, we understand that property values range dramatically across our nation. Areas such as San Francisco, California compared to Chicago, Illinois compared to Mobile, Alabama will show a wide range of property values. A home worth $100,000 in middle America may very well be worth close to $1 million in places such as Fairfax, Virginia. The cost of living is different throughout our nation as well. The Federal Housing Authority or FHA realizes these differences as well. There have been Conforming and FHA loan limits for a long time, even before the real estate crash of 2008. In this blog, we will detail what a high balance FHA area means and how to apply for a high balance FHA mortgage with Gustan Cho Associates

What Are FHA High-Balance Jumbo Loans

A high balance area is exactly what it sounds like. It is an area of the country where the property values are higher compared to the national average. Areas where the median home value exceeds the national average by 115%, are considered high balance areas. In these high balance areas, the FHA loan limit is considerably higher compared to the 2022 FHA baseline loan limit of $420,680. High balance FHA, and Conventional loans are capped at $970,800 in high-cost counties. Some of the areas include Los Angeles, San Diego, San Francisco, Denver, Miami, Naples, Atlanta, Hawaii, Chicago, Indianapolis, Kansas City, Minneapolis, Dallas, San Antonio, and Richmond. Please see the FHA LOAN LIMIT SEARCH TOOL to see if your area is included in the high balance realm. These high balance areas were created to help more Americans achieve homeownership nationwide.

How FHA High-Balance Jumbo Loans Mortgage Guidelines Determined

The data to determine what areas are considered high balance is taken directly from the Federal Housing Finance Agency or FHFA. They will compose an annual report that shows the House Price Index throughout the nation.

FHA and Conforming Loan Limits

As Americans, we understand that property values range dramatically across our nation.

Each year the loan limit will adjust depending on the state of the real estate economy. The conforming loan limit and FHA loan limit move up and down as home price indexes move up and down. Some areas of the nation have seen a slight dip and property values by others are still on the rise. The FHFA has a tough job creating the loan limits each year. Many Americans are forced into using JUMBO MORTGAGE LOANS to buy homes. A quick side note, there is currently not a loan limit for VA mortgages. most of our investors A VA home loan at $3 million. The Conventional loan limit set by FHFA is currently $647,200.

FHA High-Balance Jumbo Loans Mortgage Guidelines And Mortgage Process

What are the steps for obtaining a high-balance FHA mortgage? The steps are the same as any FHA mortgage. Just because you are in a high balance area, does not change the application process. The FHA requirements are the same for high balance areas. Meaning you still only need a 3.5% down payment with a credit score is 580 or above. If your scores are below 580, then you need a 10% down payment. Payment history and manual underwriting requirements are also the same. Please see our FHA MANUAL UNDERWRITING BLOG  for more information.

Starting The Jumbo Loans With Low Credit Scores Pre-Approval And Mortgage Process

Below is the documentation you should gather for your consultation phone call. The downside to a high balance FHA mortgage. Mortgage insurance is a requirement for every FHA mortgage product. Even if you put down 20%. If you’re looking to buy a home in a high-balance area, you need to be ready to pay extra mortgage insurance. Most FHA mortgage loans use a 3.5% down payment. In a high balance area with a 3.5% down payment, your monthly mortgage insurance will be 105 basis points compared to 85 basis points in a non-balanced area. This is an added cost to allow FHA to offer these mortgage loans. The mortgage insurance is paid directly to FHA and this mortgage insurance keeps the FHA operational.

High-Balance Jumbo Loans With Low Credit Scores Mortgage Process During The Coronavirus Pandemic

FHA high balance during the COVID-19 coronavirus outbreak. Even during the pandemic, we are still offering FHA high-balance mortgage loans without any additional LENDER OVERLAYS. We still only require a 580 credit score or above for a 3.5% down payment and have the ability to go down to credit scores as low as 500 with a10% down payment. As mentioned earlier in this article, we offer manual underwriting on FHA high-balance loans. This may be the difference in buying a home today versus waiting 12 more months. The team at Gustan Cho Associates is available seven days a week to answer your mortgage questions. Even if you have been turned down by your current lender, please give us at Gustan Cho Associates a phone call to make sure you are not dealing with a lender overlay. Call or text Mike Gracz on 630-659-7644 or e-mail [email protected] for more information. In the following paragraphs, we will cover and discuss high-balance conforming mortgage guidelines.

How Can I Qualify For A High Balance Conforming Home Mortgage?

In order to qualify for a high balance conforming or high-cost FHA loan, the property needs to be in a county that has been designated as high-cost. Many counties in the United States are classified as high-cost areas. California has the highest number of high-cost counties out of any area in the United States. High-balance loans have significantly higher loan limits than traditional areas.

Rising Home Prices With No Signs Of A Housing Correction

Home prices have been increasing with no signs of correction since 2012. Many areas in California, Florida, Mississippi, Kentucky, New Jersey, Pennsylvania, Colorado, Michigan, Georgia, Indiana, and Illinois, have seen double-digit price appreciation. Home values in these areas, as well as most states, have been increasing despite the highest mortgage rates in 10 years. Homebuilders are enjoying record sales and revenues. FHFA has increased conforming loan limits for 2022 and is now capped at $647,200.  FHFA has increased conforming loan limits for three consecutive years in a row due to rising home values. HUD followed in FHFA’s footsteps and raised FHA Loan Limits for the past six years in a row due to rising home values. In the paragraphs below, we will cover high balance conforming and jumbo mortgage lending guidelines.

What Are High Balance Conforming And Jumbo Mortgage Loans

There are areas in the United States where home prices are substantially higher. Many counties in California are considered high-cost areas. There are High Balance Conforming And Jumbo Mortgage Guidelines in high-cost areas. With the FHFA raising conforming loan limits for 2022, High Balance and Conforming Mortgage Loan Limits have increased as well. High Balance Conforming and Jumbo Mortgage Loan Limits rose to $970,800 from $822,375. FHA and VA Jumbo Loans in high-cost areas are now set at $970,800 for single-family homes.

Traditional Versus Non-Traditional Jumbo Mortgages

Gustan Cho Associates offers traditional and non-QM Jumbo Mortgages. In general and as a right-hand rule, Jumbo Loans start when the conforming loan limit ends. High-balance conforming loans are loans that are higher than the traditional standard conforming loan limit of $647,200. Any loans higher than $647,200 are considered jumbo loans. Jumbo FHA and Jumbo VA Loans are loans higher than $647,200. They are called high-balance government loans. Any conforming loans higher than $647,200 are called high-balance conventional loans. Traditional and NON-QM Jumbo Loans are not backed by Freddie Mac or Fannie Mae.

Benefits Of High Balance Conforming Loans

There are many counties in the U.S. that are considered high-cost areas.  There are many U.S. counties that are considered high-cost areas. Borrowers in high-cost areas can qualify for high balance conforming loans with conventional mortgage rates. With just a 3% to 5%, down payment, mortgage insurance is required on conventional loans. Typically, buying out mortgage insurance is cheaper than lender-paid mortgage insurance. Buying out private mortgage insurance with an upfront premium requires no annual mortgage insurance is possible and is called lender-paid mortgage insurance (LPMI). High-balance conforming loans are available for primary and secondary homes that are eligible. Refinance cash-out options available up to 80% loan-to-value on high balance conforming loans.

Jumbo Mortgage Guidelines

Gustan Cho Associates are experts in helping borrowers with qualifying for jumbo loans.

Gustan Cho Associates offers various traditional and non-traditional Jumbo Loan Programs. Jumbo Loans are also referred to as non-conforming loans. This is because they do not conform to Fannie Mae and/or Freddie Mac Guidelines. Any home loan that is higher than conforming loan limits, including high balance conventional loans, is referred to as a Jumbo loan. Gustan Cho Associates has some great NON-QM Jumbo Mortgage Loans for higher-end home buyers:

  • Closing in 30 days or less
  • 5% down payment NON-QM Jumbo Loans
  • 90% CLTV Jumbo Mortgage Loan Program with a piggyback second mortgage
  • Jumbo Loans with credit scores as low as 500 FICO
  • One to four units
  • No private mortgage insurance
  • Jumbo Loans with loan limits up to $3 million
  • Bank statement loan program for self-employed borrowers
  • Asset depletion loan programs

Qualify Today On Your High-Balance Conforming And Jumbo Mortgage With Gustan Cho Associates

Gustan Cho Associates are experts in helping borrowers with qualifying for jumbo loans. We have both traditional and non-QM jumbo mortgages. GCA Mortgage has a traditional 90% LTV jumbo mortgage loan program with up to a 50% debt to income ratio and credit scores down to a 660 FICO. We also have non-QM jumbo mortgages with credit scores down to a 500 FICO. We can help self-employed borrowers qualify for a 12-month bank statement mortgage loan with no income tax returns required. Gustan Cho Associates are mortgage bankers and correspondent lenders with the ability to broker mortgage loans. We have dozens of relationships with non-QM and alternative financing mortgage lenders.

Lenders for Jumbo Loans With Low Credit Scores and Multiple Mortgage Options

Borrowers can contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response for more information. Or email us at [email protected] Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. Gustan Cho Associates is known nationally for not having any lender overlays on government and conventional loans. We also have dozens of wholesale lending partnerships with non-QM wholesale lenders. Over 75% of our borrowers are folks who could not qualify at other lenders. When borrowers get denied at other lenders, they come to us at Gustan Cho Associates to get qualified and close on their home loans.