NON-QM Jumbo Home Loans With Credit Scores Down To 500 FICO


NON-QM Jumbo Home Loans With Credit Scores Down To 500 FICO

This BLOG On NON-QM Jumbo Home Loans With Credit Scores Down To 500 FICO Was UPDATED On November 7th, 2018

NON-QM JUMBO Home Loans With Credit Scores Down To 500:

Jumbo mortgages are becoming more and more popular in certain parts of the country.

  • Many places such as Chicago, Denver, Los Angeles, Portland, Dallas, and many others are in the midst of a real estate boom
  • This is driving up the cost of the average home
  • In areas such as these it is very difficult to find a home below $500,000
  • In many areas this will put home buyers into a jumbo mortgage
  • A jumbo mortgage in the year 2018 is any loan amount above $453,100 (in NON high-cost areas)
  • The Federal Housing Finance Agency raised the conforming loan limits to $453,100 in 2018 from $424,100 in 2017
  • Before that it was $417,000
  • Home Buyers can review the announcement of the increase right on FHFA’s Website
  • We should get an update soon for the high cost area limits for 2019

Conforming Versus Non-Conforming Loans

Each year The Housing and Economic Recovery Act (HERA) establishes a new baseline conforming loan limit.

  • Typically announced around December 1st each year
  • The conforming loan limit is adjusted each year for Fannie Mae and Freddie Mac to offset the changes in the average home price in the United States
  • From quarter 3 2016 to quarter 3 2017, FHFA saw the average house price increase 6.8%, which is now reflected in the conforming loan limit of $453,100

What Is The Definition Of High Cost Areas

What is a high-cost area?

According to FHFA, areas in which 115% of the local median home value exceeds the baseline conforming loan limit (from paragraph above) that area will be “high-cost”.

  • Meaning the conforming loan limits in these areas are higher than $453,100. There is a ceiling put on high-cost areas of 150% of the baseline loan limit
  • For 2018, that happens to be $679,650 or 150% of $453,100
  • So, what happens when you’re trying to buy a house outside of a high-cost area with a loan amount higher than $453,100?
  • You then enter the Jumbo mortgage or NON-CONFORMING loan category.

Lending Guidelines On NON-QM Jumbo Home Loans

Seems simple right?

Well, it’s not simple. Non-conforming Jumbo mortgages (also referred as NON-QM Jumbo Home Loans) are a gray area of the mortgage industry.

  • They are not like Fannie Mae or Freddie Mac with very black and white mortgage guidelines
  • To obtain jumbo financing, typically borrowers need a credit score of 720 or above
  • Lenders also require very clean payment schedule on credit report
  • Bankruptcies, foreclosures, deed and lose, even short sales will affect borrowers from qualifying for traditional Jumbo Loans
  • This is where Gustan Cho Associates can really help you out

Qualifying For NON-QM Jumbo Home Loans Versus Traditional Jumbo Mortgages

For many potential home buyers, the thought of getting their credit score to 720 seems impossible.

  • Depending on consumer credit profile it may take borrowers years to get their score back where it was
  • This is why we have a full line of NON-QM Jumbo Home Loans and NON-QM mortgages
  • We are able to help borrowers with credit scores down to 500 obtain Jumbo mortgages!
  • NON-QM opens the door to home ownership to thousands of Americans who do not fit in the everyday mortgage lending guidelines
  • We are able to provide jumbo mortgages with as little as 5% down payment
  • See our 95% LTV Jumbo Mortgage blog for more details on that program

Credit Scores Versus Down Payment On NON-QM Jumbo Home Loans

For many borrowers down payment is not the issue. Credit score or credit issues are usually what holds someone back from obtaining a jumbo mortgage.

See our credit score matrix below:

  • 500 to 539                    75%                            $1,000,000
  • 540 to 599                    80%                            $1,000,000
  • 600 to 610                    85%                            $1,500,000
  • 620 and higher             80%                            $2,000,000
  • 660 and higher             90%                            $2,000,000
  • 700 and higher             90%                            $3,000,000
  • 720 and higher             95%                            $1,500,000

All of the programs above allow one 30-day late payment within the past 24 months with zero effect on interest rate:

  • Borrowers can be one day out of foreclosure and still obtain a jumbo mortgage with a NON-QM loan
  • Even one day out of a foreclosure, with a 600 credit score, you can get a jumbo loan with 20% down payment up to $1,000,000
  • As you can see we offer mortgage products that most lenders do not
  • Gustan Cho Associates go above and beyond with no lender overlays on FHA, VA, USDA, conventional loans
  • We offer a full slate of NON-QM loan products that help everyday Americans buy their dream homes

I have closed many NON-QM Jumbo Home Loans. I consider myself an expert. If you have questions on your exact scenario, please reach out to me directly on 630-659-7644 or text for faster response. Or email us at mgracz@gustancho.com. I am available 7 days a week and can answer your questions. A jumbo mortgage is not impossible to obtain, even with blemishes on your credit profile. Please reach out to The Experts.

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