Are you looking for a big loan while running your own business? You’re in the right spot. Getting a big mortgage, called a jumbo mortgage, can be tough without regular paychecks like other workers get.
Right after the 2008 Real Estate and Credit Meltdown, self-employed home buyers had a difficult time trying to qualify for home loans. The whole mortgage industry went through a major overhaul and changes.
But don’t worry. At Gustan Cho Associates, we’re pros at helping business owners like you get the jumbo mortgages you need for self-employed borrowers. This guide will clarify how to get jumbo mortgages for self-employed borrowers – what you need to qualify, where to find them, and much more.
Jumbo Mortgages for Self-Employed Borrowers: Simplifying Big Loans
Jumbo mortgages are big loans that are more than the usual rules allow, specifically over $726,200 in most places and up to $1,089,300 in expensive neighborhoods for 2024. You’ll need a jumbo mortgage if you dream of buying a fancy house.
Getting one of these big loans, jumbo mortgages for self-employed borrowers can seem tricky for folks who work for themselves. Usually, banks want to see a lot of paperwork and consistent income proofs, which is hard when your earnings change every month. But there’s good news because there are plenty of loan options designed just for the needs of self-employed borrowers looking for jumbo mortgages for self-employed borrowers.
Eligibility Criteria for Jumbo Mortgages for Self-Employed Borrowers
Here’s a simple breakdown of what you’ll need for jumbo mortgages for self-employed borrowers:
- Income Verification: Being your own boss means showing more papers to prove you make money. This could be tax papers, a list of your income and expenses, and bank statements.
- Credit Score: Good credit score increases your chances of getting a loan and securing a low interest rate. For jumbo mortgages for self-employed borrowers, you usually need a score of at least 680, but the higher, the better.
- Debts-to-Income Ratio: Lenders look at your debts compared to what you earn monthly. It’s best if your debt payments are at most 43% of your income. But, some places might let this slide if you’re in a solid financial spot.
- Down Payment: For jumbo mortgages for self-employed borrowers, you must put down a bigger chunk of change upfront—usually 10-20% of the home’s cost. The exact amount might change depending on your credit and other details.
- Cash Reserves: Lenders want to see you’ve got extra cash to cover mortgage payments, especially since income can go up and down when you’re self-employed. They usually want savings that could cover 6-12 months of payments.
Application Process for Jumbo Mortgages for Self-Employed Borrowers
When getting jumbo mortgages for self-employed borrowers, the process is straightforward but requires some legwork. Here’s a simpler look at what you need to do:
- Gather Documentation: Start by getting all your papers together. This means pulling together your tax records, bank statements, and any documents that show how much money your business is making. It’s important to make sure everything is current and paints a clear picture of your finances.
- Consult with a Mortgage Broker: Next up, chatting with a mortgage broker can be a huge help. They’re the pros who can guide you through jumbo mortgages for self-employed borrowers, helping you find the best deal for your situation. They’ll also help fill out any applications and talk to the lenders.
- Pre-Qualification: Getting pre-qualified is like taking a quick peek at what you can borrow. It’s when a lender examines your financial situation—like your income, credit score, and other factors—to give you an idea of the mortgage size you might get.
- Submit Application: After pre-qualification, you’ll officially apply, handing in all the paperwork you gathered earlier. The lender goes through everything in detail to decide if you’re a good candidate.
- Underwriting: This is where the lender examines your financial life to determine whether lending you money is a smart move. They’ll consider your income, credit history, and even the value of the house you want to buy.
- Approval and Closing: If everything checks out and your application gets the thumbs up, you’re on to the closing. This is the final step, where you sign all the paperwork and officially secure your jumbo mortgage for self-employed borrowers.
So, while it might seem like a lot, breaking it down into steps can make getting jumbo mortgages for self-employed borrowers much more manageable.
Types of Jumbo Mortgages for Self-Employed Borrowers
When you’re self-employed and looking to buy a big house, you might consider different kinds of jumbo mortgages made just for folks like you. So, let’s break down these jumbo mortgages for self-employed borrowers into simpler terms:
Standard Full Documentation Jumbo Mortgage
This one’s perfect if you’ve had your own business for a couple of years. You need to show your tax returns from the past two years and a few more papers to prove how much you make.
Here’s the deal:
- You’ll need those two years of tax returns.
- Your credit score has to be good.
- You should have enough savings to cover 12 to 18 months of expenses.
- The interest rates they offer you are competitive.
Bank Statement Loans
These are great jumbo mortgages for self-employed borrowers who find it tricky to show their income the usual way. Instead of tax returns, you show your bank statements from the last 12 or 24 months, and they’ll figure out your income based on the money that goes into your account.
Here’s what’s important:
- They look at 12 or 24 months of your bank statements.
- They count half to all of the money you deposit from your business.
- You need a credit score of at least 600.
- You can make a down payment as little as 10-20%.
Asset Depletion Loans
These are great for borrowers who might have a low income but have lots of assets. They calculate what you can borrow by looking at everything you own and dividing it over a certain number of months.
Key things to know:
- They calculate your loan based on all you own.
- You need to have a good amount of assets.
- Your credit score should be at least 620.
- The terms and how much you can borrow are flexible.
These are your options for jumbo mortgages for self-employed borrowers. Each has its perks, so it’s all about what fits your situation best.
Interest Rates and Terms for Jumbo Mortgages for Self-Employed Borrowers
Interest rates for jumbo mortgages for self-employed borrowers can change a lot. What you pay mostly depends on your credit score, down payment, and the kind of loan you get. Usually, jumbo mortgages for self-employed borrowers have higher rates than regular loans because they’re riskier for the folks lending the money.
What to Think About:
- Credit Score: If you have a good credit score, you’ll likely get a lower rate.
- Down Payment: Putting more money down can get you a better rate.
- Loan Type: Special loans based on your bank statements or assets might cost more than usual with all the paperwork.
- Market Conditions: Rates fluctuate, so check for the latest rates.
Tips for Improving Your Chances of Approval
Getting approved for jumbo mortgages for self-employed borrowers can seem tough, but there are ways to help your chances:
- Improve Your Credit Score: To increase your credit score, reduce your debt, always pay on time, and fix any mistakes on your credit report.
- Save for a Bigger Down Payment: Putting more downpayment can improve rates and conditions.
- Keep Your Financial Records Up to Date: Ensure that all your financial papers, such as profit and loss statements and bank statements, are correct and recent.
- Find a Skilled Mortgage Broker: A broker who knows about jumbo mortgages for self-employed borrowers can guide you through the process and help you pick the right loan.
- Plan for Cash Reserves: Having extra money saved shows lenders you’re in a good spot financially.
By following these steps, including working with the right broker and focusing on your financial health, you can improve your chances of getting jumbo mortgages for self-employed borrowers.
Comparing Jumbo Mortgage Offers
When you’re digging into jumbo mortgages for self-employed borrowers, remember a few simple things to make sure you’re getting the best deal:
- Interest Rates: Check out what different places offer to see who has the lowest rate.
- Loan Terms: Look into how long you’ll be paying back the loan, what your payments will look like, and if there are any extra perks.
- Fees and Costs: Keep an eye on any upfront fees or costs you must pay to get the loan.
- Lender Reputation: Stick with a lender known for treating self-employed borrowers right and who’s known for good customer service.
In summary, these tips can help you stay on the right track when exploring jumbo mortgages for self-employed borrowers.
Getting a big loan, like a jumbo mortgage, when you work for yourself might seem tough, but it’s doable with some preparation and the right help. At Gustan Cho Associates, we’re all about making it easier for you, especially when it comes to jumbo mortgages for self-employed borrowers. Whether you’re eyeing your dream house or need a sizable loan, we have the insights and options to fit your needs.
Need help with jumbo mortgages for self-employed borrowers? Contact Gustan Cho Associates. You can call us at 800-900-8569, shoot us a quick text for faster service, or email us at alex@gustancho.com. We’re here to assist you from the first step to the last, ensuring you land that big loan for your dream home.
FAQs: Jumbo Mortgages For Self-Employed Borrowers
- 1. What is a jumbo mortgage for self-employed borrowers? Jumbo mortgages for self-employed people are large home loans for those who run their own businesses. They are for individuals who need home loans that are bigger than the limits set by Fannie Mae and Freddie Mac.
- 2. How much can I borrow with a jumbo mortgage if I am self-employed? When you have a jumbo mortgage as a self-employed borrower, the amount you can borrow depends on your financial situation. Typically, these loans start at $726,200 and can go up to $1,089,300 or more in high-cost areas.
- 3. What documents do I need to apply for a jumbo mortgage if I’m self-employed? You must provide tax returns, profit and loss statements, and bank statements to confirm your income.
- 4. Can I get a jumbo mortgage if I don’t have tax returns? Yes, options like bank statement loans and asset-depletion loans allow self-employed borrowers to qualify for jumbo mortgages without needing tax returns.
- 5. What credit score do I need to qualify for a jumbo mortgage as a self-employed borrower? For jumbo mortgages for self-employed borrowers, you typically need a credit score of at least 680, but having a higher score can help you secure better rates and terms.
- 6. How much down payment is required for a jumbo mortgage if I am self-employed? You typically need to put down 10-20% of the home’s purchase price, but the amount can vary based on your credit score and other factors.
- 7. What is a bank statement loan for self-employed borrowers? A bank statement loan is a type of jumbo mortgage for self-employed borrowers where your income is verified using bank statements instead of tax returns, considering deposits over 12 or 24 months.
- 8. Can I qualify for a jumbo mortgage with a low credit score if I’m self-employed? It might be possible for self-employed borrowers with a lower credit score to qualify, but you may need to make a larger down payment, and the interest rates could be higher.
- 9. How does asset-depletion work for jumbo mortgages for self-employed borrowers? Asset depletion for jumbo mortgages for self-employed borrowers involves using your total assets to determine your qualifying income, divided over a certain period to calculate your monthly income.
- 10. Are there any special lenders for jumbo mortgages for self-employed borrowers? Yes, some lenders and mortgage brokers, like Gustan Cho Associates, specialize in jumbo mortgages for self-employed borrowers. They can help you find the best loan options based on your unique financial situation.
If you have any questions about Jumbo Mortgages For Self-Employed Borrowers, please contact us at 800-900-8569. Text us for a faster response. Or email us at alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.
This blog about Jumbo Mortgages For Self-Employed Borrowers was updated on July 22nd, 2024.
