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:
- CREDIT SCORES LOAN TO VALUE MAXIMUM LOAN AMOUNT
- 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 email@example.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.