Jumbo Non-QM Mortgage Guidelines With Bad Credit

This ARTICLE On Jumbo Non-QM Mortgage Guidelines With Bad Credit

Jumbo Non-QM Mortgage Guidelines are not a set uniform. It is no secret in the real estate industry that property values are once again on the rise. Some experts believe they are rising too fast. The American people hope we learned our lesson from the real estate crash of 2008.

Gustan Cho Associates has multiple traditional and non-QM jumbo mortgage loan programs.

As home values continue to rise, so does the conforming loan limit threshold. However, many homes in our country will still require a jumbo mortgage to purchase. In this blog, we will explain what a jumbo mortgage means, detail a few jumbo mortgage options we have for individuals with troubled credit, and how to apply for a jumbo mortgage with Gustan Cho Associates. We will discuss and cover Jumbo Non-QM Mortgage Guidelines With Bad Credit.

Jumbo Non-QM Mortgage Guidelines With Bad Credit For High-End Homebuyers

Jumbo Non-QM Mortgage With Bad Credit

Some of our clients are not aware of the term “jumbo mortgage”. A jumbo mortgage is defined as any loan amount of one dollar over the conforming loan limit of a specific county. Most counties across the nation now have a conforming loan limit of $548,250. And the FHA loan limit is smaller in most counties, the standard FHA loan limit is $359,362 for 2021. These amounts are set every calendar year by the Federal Housing Finance Agency (FHFA). They get annual home price index data from across the nation and change the loan limit according to those reports.

Home prices have been skyrocketing the past few years. The booming housing market is pricing many homebuyers out of the housing market. For the most recent years, we have seen an increase in the conforming loan limits, due to home price indexes increasing across the nation. The increase from 2019 to 2020 was about 6%. It raised from $484,350 to $510,400 in non-high balance counties. Then the increase from 2020 to 2021 went up to $548,250.

There are areas such as Los Angeles County, California that are considered “high-balance”, where the home price index exceeds the nation’s median. These areas can have conforming loan limits as high as 150% of the median. For 2020, the MAX high-balance conforming loan limit was $765,600 (150% of $510,400)

In a county such as Los Angeles, any loan above $765,600 was considered a jumbo mortgage in 2020. The high-balance conforming loan limit for Los Angeles County went up for 2021. The new 2021 high-balance conforming loan limit for Los Angeles County is $822,375.

Purchasing High-End Home And Meeting Jumbo Non-QM Mortgage Guidelines With Bad Credit

Purchasing a home with a jumbo mortgage can’t be quite difficult. The qualifications for a standard jumbo loan are astronomical. Typically, you will need a 720 credit score, 20% down payment, debt-income ratio below 41%, and 12 for months of reserves in your bank after closing. One month of reserves is equal to one month of mortgage payments as liquid capital and must be verified during the underwriting process.

Some jumbo products require up to 18 months of reserves. Since these mortgage loans are ineligible to be sold to Freddie Mac and Fannie Mae, each individual lender can set their own jumbo guidelines. The banks lost a ton of money in this market during the crash of 2008, so their guidelines are very strict. As you can see the majority of Americans will not qualify for a standard jumbo mortgage product.

Jumbo Non-QM Mortgage Guidelines With Bad Credit And Lower Credit Scores

How to qualify for a jumbo mortgage with less than perfect credit?

Gustan Cho Associates have a wide selection of jumbo mortgage products available for our clients. Many of them are not as strict as your standard jumbo mortgage. We will now detail a few low programs we have available with a credit score lower than 720.

Extended Jumbo Mortgage:

  • Gustan Cho Associates is set up with a few investors who will allow a standard jumbo mortgage down to a 680 credit score
  • These loans are still very tough to qualify for and will require a 20% down payment (sometimes more) with credit scores below 720
  • Please keep in mind this mortgage product does follow the typical jumbo guideline criteria and will require 12 months of liquid cash reserves after the high down payment

Still a rare jumbo product because it allows a lower credit score option.

Non-QM Versus Traditional QM Jumbo Mortgages

Non-QM Versus Traditional QM Jumbo Mortgages

NON-QM jumbo mortgage:

  • Over the past few years, we have seen a resurgence of NON-QM mortgage lending
  • NON-QM stands for a “non-qualified” mortgage. In layman’s terms, these mortgage products do not follow Fannie Mae or Freddie Mac guidelines
  • The investor will have their own guidelines for each mortgage product

This opens up jumbo mortgage financing to credit scores all the way down to 580.

Using Non-QM Versus Traditional Mortgages

When do borrowers use NON-QM?

  • Recent derogatory credit events
  • Mortgage late payments
  • Foreclosure in the past 7 years
  • Recent short sale
  • Recent deed in lieu
  • Recent bankruptcy

Most standard jumbo products will have a 24 month waiting period if you are late payment on your mortgage (or rent) and up to an 8 year waiting period for foreclosures, short sales, and bankruptcies. These NON-QM loan products will allow you and your family to be homeowners before the lengthy waiting period for standard jumbo mortgages.

Jumbo Non-QM Mortgage Guidelines For Self-Employed Borrowers

Another popular time to utilize a NON-QM jumbo mortgage is for our self-employed borrowers. It can be next to impossible to file your federal tax returns to show enough income to qualify for a jumbo mortgage. This is when a bank statement option is a great idea. Gustan Cho Associates offers BANK STATEMENT LOANS for self-employed borrowers with a credit score all the way down to 600 for jumbo mortgage financing. An underwriter will calculate your business-related deposits shown on your bank statements over a 12 or 24 month period.

Generally speaking, they will count 50% of all business-related deposits. The other 50% is estimated to be business-related expenses. Your tax returns are not involved in this transaction, making this a very attractive program for our self-employed clientele.

Jumbo Non-QM Mortgage Guidelines On Reserve Requirements

Jumbo Non-QM Mortgage On Reserve Requirements

NON-QM mortgage options also have a lower reserve requirement, making this an attractive loan product for jumbo mortgage borrowers. It can be next to impossible to save for the down payment, having additional cash reserves at the end of the transaction can be tough. Most NON-QM loan products only require 3 or 6 months of reserves. We have also been able to get a reserve waiver in the past.

A NON-QM mortgage underwriter has the ability to view each file on a case-by-case basis and make exceptions based on other qualifications.

Starting The Non-QM Jumbo Mortgage Process

How to apply for a NON-QM jumbo mortgage with Gustan Cho Associates?

Gustan Cho Associates have done its best to make the application process as easy as possible. The first step is to call Mike Gracz on 630-659-7644. You will have a brief mortgage consultation to make sure you will fit into the jumbo mortgage qualifications. Assuming that the call goes well, an application link will be sent to you from a loan officer licensed in your state. You will need to complete the application link and send in the required documentation. That documentation will vary based on the loan program. Once your loan officer has your credit report verified and all of your income and asset documentation, they will complete the pre-approval process. From there the home-buying process is the same as you a standard mortgage product.

As you can gather from reading this article, we are experts in jumbo mortgage qualifications. We offer numerous different standard jumbo mortgages as well as a full line of NON-QM jumbo mortgages. For any general mortgage questions please call Mike Gracz, 630-659-7644 or email [email protected]. We pride ourselves on customer service and are available 7 days a week, including holidays. Please subscribe to our YouTube CHANNEL to stay up-to-date on the ever-changing mortgage guidelines.

Leave a comment