Jumbo Mortgage Guidelines During The COVID-19 Pandemic

This ARTICLE On Jumbo Mortgage Guidelines During The COVID-19 Pandemic Was PUBLISHED On July 17th, 2020

What are Jumbo's mortgage guidelines during the COVID-19 pandemic?

UPDATED 2020 Jumbo Mortgage Guidelines During The COVID-19 Pandemic On Jumbo Loans:

  • As Americans continue to struggle with the COVID-19 coronavirus outbreak, the mortgage industry is still feeling the ripple effect
  • While mortgage companies are very busy, many jumbo mortgage products have changed procedures and qualifications
  • Most lenders have added additional LENDER OVERLAYS to their mortgage products during these times, jumbo mortgage products were hit even harder
  • In this blog, we will explain what a jumbo mortgage means and detail on how to obtain a jumbo mortgage during the coronavirus outbreak

In this article, we will discuss and cover the 2020 UPDATED Jumbo Mortgage Guidelines During The COVID-19 Pandemic.

What Are Jumbo Loans

What is a jumbo mortgage?

  • A jumbo mortgage is any mortgage loan where the loan amount is greater than the county conforming loan limit
  • The conforming loan limit is $510,400 for the calendar year of 2020 in most counties across the United States
  • There are many counties across the nation that are considered “high balance”, where the average median cost of a home is greater than $510,400
  • In areas such as San Francisco California, Denver Colorado, and Fairfax, Virginia the average home costs more than the conforming loan limit
  • Fannie Mae and Freddie Mac will allow counties to have high balance loan limits all the way up to $765,600
  • In a high balance county, any loan amount above that number will be considered a jumbo mortgage

Click this MAP to see where the high balance areas are located.

Jumbo Mortgage Guidelines During The COVID-19 Pandemic: Eligibility Requirements

Are the qualifications for jumbo mortgages different?

  • The qualifications for a jumbo mortgage are much more strict compared to a conventional or FHA financing
  • Since you are borrowing such a large sum of money, it makes sense for the guidelines to be more strict
  • The main difference between a conventional and a jumbo mortgage is the reserve requirement
  • Reserves are liquid assets available after you pay down payment and closing costs
  • Many jumbo products require 12 months of the mortgage payment to be in your bank after closing

There are jumbo programs that allow less and they are jumbo programs that require more reserves.

Credit Score Requirements On Jumbo Mortgages

What are the requirements for creditworthiness in large mortgages?

Credit score requirements on jumbo mortgages are also higher.

  • Some of the most favorable jumbo mortgage products require a 720 or even a 740 credit score or higher
  • Generally speaking, the higher the credit score the better loan terms you look at in the lower reserve requirement
  • You can still obtain a jumbo mortgage with credit scores in the 600’s

Most jumbo programs will start at credit scores of 680 or higher, but programs are available with lower credit scores.

Changes On Jumbo Mortgage Guidelines During The COVID-19 Pandemic

During the COVID-19 coronavirus outbreak, we saw many loan programs disappear overnight.

  • Most jumbo mortgages and NON-QM mortgage lending products were put on hold
  • NON-QM programs have slowly returned with more strict underwriting requirements
  • It used to be possible to get a jumbo NON-QM mortgage loan with a 600 credit score and only 3 months reserves
  • Now the requirements are upper 600’s with at least 6 months of reserves
  • However, we see the trend going back to normal

As we deal with the COVID-19 coronavirus, we should see improvements to the NON-QM products moving forward.

VA Jumbo Mortgage Guidelines

VA jumbo mortgages:

  • With the Blue Water Navy Vietnam Veterans Act of 2019, there is no longer a loan limit for VA mortgage lending
  • VA mortgages used to follow the conforming loan limit until January 1, 2020
  • After January 1, there is no longer a max loan limit before a down payment is required for VA mortgage lending
  • Our investors will go up to a loan amount of $3 million without a down payment
  • Of course, the veteran must qualify based on credit, payment history, and reserve requirements

Since there is no longer a loan limit, the industry refers to a VA jumbo mortgage as a VA loan above $510,400 (for 2020).

Non-QM Jumbo Mortgage Guidelines During The COVID-19 Pandemic

What are the mortgage guidelines during the COVID-19 pandemic?

Non-QM jumbo mortgages. NON-QM  jumbo mortgages are just now returning since the outbreak started.

  • As mentioned above, they do have additional requirements
  • BANK STATEMENT LOANS are incredibly popular for self-employed borrowers
  • These programs went away right after the outbreak but are now available again
  • There are additional requirements based on the current bank statement
  • An underwriter must prove that you have been able to work during the outbreak
  • Your income will be calculated accordingly
  • If you have not had an income since the outbreak, you are more than likely not eligible to qualify for a Jumbo loan

You must have current business-related deposits to verify your business has current income.

Traditional Jumbo Mortgage Guidelines

Standard jumbo mortgage product. It is no secret that interest rates are incredibly low during these unprecedented times.

  • The economy is in a tailspin and the FEDERAL RESERVE  cannot raise rates on the American people right now
  • Jumbo mortgage rates are very low
  • If you feel like your rate is high please give us a call today on 630-659-7644
  • Mike Gracz will be able to provide you with a rate quote from a licensed loan officer in your state
  • Most jumbo mortgage products typically require a 12-month reserve threshold as well as a 680 credit score or higher
  • Depending on the loan program, your debt to income usually needs to be below 43%
  • Many products were as low as 41%
  • The highest loan to value currently available is 90% CLTV
  • That means combined loan to value

The first jumbo mortgage will be up to 80% loan to value and you are eligible to use secondary financing for the remaining 10%.

95% LTV Non-QM Jumbo Loans

95% jumbo mortgage loan without mortgage insurance.

  • This loan program is currently on hold due to the COVID-19 coronavirus outbreak
  • We have received many phone calls during these months asking if this product is available
  • As of today, it is not available
  • There is no clear timeline on if and when this product will be available again.

There is no clear timeline on if and when this product will be available again. GCA Mortgage Group will keep our viewers updated when the 95% LTV Non-QM loan program becomes available.

Refinancing Jumbo Mortgage Guidelines

Which means refinancing large mortgages

Jumbo refinance?

  • Many Americans who are currently in a jumbo mortgage can benefit greatly from refinancing their mortgage loan
  • Interest rates are incredibly low, and this can be a great time to take it vantage of the market
  • Cash-out jumbo mortgages are currently back in circulation
  • This could be a great opportunity to lower your overall monthly payments with the equity in your home
  • For a cash-out jumbo mortgage, quote call Mike Gracz on 630-659-7644 or email [email protected]

Gustan Cho Associates are your one-stop-shop for mortgage questions. We have more mortgage programs available than most lenders. We have a full slate of jumbo mortgage products to assist our clients. Please call Mike Gracz on 630-659-7644 to discuss any jumbo mortgage questions you may have. We are available seven days a week and on weekends.

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