NON-QM Jumbo Loans For Bad Credit And Income Documents

NON-QM jumbo loans are alternative mortgage loan programs for owner-occupant primary homes, second homes, and investment properties. Most non-QM loans do not have maximum loan limits. Any non-QM or alternative lending products with a loan balance higher than the 2022 conforming loan limit of $647,200 is called and/or often referred to as non-QM jumbo loans. Non-QM mortgage rates on non-QM jumbo loans are slightly higher than conforming loans and are determined by the borrower’s credit scores, down payment, credit issues, and other risk factors of the borrower. There are many non-QM jumbo loan programs offered by Gustan Cho Associates.

Non-QM Jumbo Mortgage Options

Gustan Cho Associates has a national reputation for its no lender overlay on government and conventional loan business model.

Gustan Cho Associates has a national reputation for its no lender overlay on government and conventional loan business model. We are known by many as a one-stop mortgage shop due to having countless non-QM loan options for homebuyers and real estate investors of owner-occupant homes, second homes, and investment properties. The following are the non-QM mortgage loan programs we have available with no maximum loan limits:

  • 12-month bank statement loans with no income tax returns required and limited documentation for self-employed borrowers
  • No-doc mortgages for primary homes
  • Non-QM loans one day out of bankruptcy and foreclosure
  • Rental income mortgages with no personal income verification
  • Asset-based mortgages
  • Foreign National Loans (ITIN)
  • Interest-Only Home Loans
  • Mortgage loans with recent credit events
  • Non-QM jumbo loans one day after bankruptcy and/or foreclosure

What Classifies As A Jumbo Loan?

In today’s bullish housing markets, many homebuyers are exploring jumbo mortgages versus conforming loans. One of the frequently asked questions from homebuyers is what classifies as a jumbo loan? Michelle McCue a senior associate at Gustan Cho Associates said the following about the difference between non-QM and qualified mortgages are and what classifies as a jumbo mortgage:

A jumbo loan (or jumbo mortgage) is a type of financing where the loan amount is higher than the conforming loan limits set by the Federal Housing Finance Agency (FHFA). The 2022 loan limit on conforming loans is $647,200 in most areas and $970,800 in high-cost. A significant difference between a QM loan and a Non-QM loan is that a Non-QM loan uses alternative methods of income verification (vs. … Also, Non-QM loans are not insured, guaranteed, or backed by FHA, VA, Fannie Mae, or Freddie Mac. Nontraditional loans are loans that not only don’t conform to Fannie Mae and Freddie Mac’s standards but also don’t have typical repayment schedules. Unlike FHA or VA loans, with a nontraditional loan, you may not even have to make payments every month. A jumbo loan, also known as a non-conforming loan, portfolio loan, or non-agency loan, describes a mortgage loan exceeding the conforming loan limits set by Freddie Mac (FHLMC) and Fannie Mae (FNMA). … If your desired loan amount exceeds set limits, a jumbo loan will cover the full amount.
A Jumbo loan is often referred to as a non-conforming loan. Conventional loans are called conforming loans. This is because they need to conform to FANNIE MAE or FREDDIE MAC mortgage lending guidelines\Home prices have been skyrocketing for the past five years. Both the Federal Finance Housing Agency (FHFA) and HUD have been increasing the maximum conforming loan limit and FHA loan limit for the past five years. The maximum conforming loan limit set by the Federal Housing Financing Agency (FHFA) for 2022 is $647,200.

VA High-Balance Jumbo Loans Versus Non-QM Jumbo Loans

VA loans no longer have a maximum loan limit effective as of January 1st, 2020. Any mortgage loans higher than the conforming lending limits capped by FANNIE MAE or FREDDIE MAC are called non-conforming loans or Jumbo Loans. Non-QM Jumbo Loans are an alternative form of financing. Non-QM Loans for self-employed borrowers do not require any income tax returns. 12 months of bank statement deposits are averaged and used as the monthly income of borrowers on non-QM jumbo loans. VA loans with loan amounts higher than the 2022 conforming loan limits of $647,200 are called High-balance VA jumbo loans.

Debt To Income Ratio Requirements On Non-QM Jumbo Loans 

The maximum debt to income ratio allowed on non-QM jumbo loans is 50% loan to value with compensating factors. There is no private mortgage insurance premium required on non-QM jumbo loans. A 10% to 30% down payment is required. The amount of down payment depends on borrowers’ credit scores, the type of property, and the length of time had a prior bankruptcy and/or housing event.

Traditional Jumbo Mortgages

Not all mortgage companies offer Jumbo loans. Lenders that do offer Jumbo loans often have tougher mortgage guidelines than lenders offering government and conventional loans. Jumbo lenders require the following:

  • higher down payments
  • higher credit scores
  • reserves
  • lower debt to income ratios than conventional mortgage lenders

Mortgage Rates on Jumbo Loans

Jumbo mortgage rates are normally 0.50% to 1.5% higher than traditional conforming mortgage rates. The majority of mortgage companies require a minimum of a 20% to 25% down payment on traditional jumbo loans. Gustan Cho Associates offers 90% LTV  traditional jumbo loan programs which means the borrower only needs to put a 10% down payment. The debt to income ratio on our 10% down payment jumbo loan program is 50% DTI. The minimum credit score requirement on our traditional 90% LTV jumbo loan program is 720 FICO. Other lenders will require a 700 plus credit score on traditional jumbo loans. Non-QM and alternative mortgage lenders require credit scores down to a 550 FICO. Larger down payments are required on high-balance non-QM loans. There is no mortgage insurance required with non-QM jumbo loans.

How Can I Get The Best Rates On Non-QM Mortgages

As mentioned earlier, Jumbo mortgage rates are higher than conforming mortgage rates. Why are Jumbo loan mortgage rates higher? The main reason why mortgage rates on Jumbo loans are higher is that the federal government does not back Jumbo loans. Conventional loans are bought on the secondary market by Fannie Mae and/or Freddie Mac. Government loans are insured and backed by FHA, VA, and USDA. Jumbo loans are backed by private investors. Jumbo mortgages are riskier than other loan programs. That is why Jumbo mortgage lenders have higher mortgage rates and require tougher lending guidelines than other mortgage loan programs.

California Real Estate: High-Cost Areas, Jumbo Conforming Loan Limits

California has one of the highest real estate prices in the nation and the average loan size in California is $687,000 whereas, in other parts of the country, the average loan size is $425,000. California has a housing shortage despite the mass exodus of Californians to other lower-taxed states with affordable housing. This is due to the heavy environmental regulations by California’s Democrats and the land shortage near major cities like Los Angeles, San Francisco, Sacramento, San Diego, and Orange County. Fannie Mae and Freddie Mac were taken over by the federal government in late 2008 during the real estate and mortgage collapse. This takeover happened as the housing market throughout the country was tanking like never before in history. The federal government intervened. In 2009, the United States Congress created and passed the American Recovery and Reinvestment Act of 2009. This law boosted the normal conforming mortgage limit from the standard $647,200 to higher loan limits in many parts of the country. This increase in loan limits was a designated high-cost area, especially areas throughout the state of California. 2022 high-cost FHA and Conventional loan limits are capped at $970,800 for single-family homes.

Buying Homes In High-Cost Areas With NON-QM Jumbo Loans

 NON-QM Jumbo Loans Prior to the passage of this new mortgage lending increase law, many homeowners in California could not purchase homes in many high-cost areas of California such as the following areas

  • San Francisco
  • San Diego
  • Orange County
  • Los Angeles
  • Irvine
  • Sacramento
  • San Francisco

Now homebuyers in high-cost areas could borrow conforming conventional loans up to $679,650 without needing to qualify for Jumbo loans.

Qualifying For A Jumbo Loan Programs

Jumbo loan eligibility requirements vary from lender to lender. In general, there are several factors to qualify for Jumbo Mortgages:

  • Jumbo Loans are considered riskier loans
  • Jumbo mortgage rates are credit driven and loan to value-driven

To qualify for a Jumbo Loan with the best mortgage rates, a home buyer needs the following:

  • a credit score of 740 plus
  • down payment of 25%
  • debt to income ratio below 40% DTI

This does not mean that borrowers who cannot meet the above requirements will not qualify for a Jumbo loan. But their terms and rates can be worse.

Down Payment On Traditional Jumbo Loans

In general, the larger a down payment a homebuyer puts down, the less risk a mortgage lender has. Jumbo mortgage loans normally require a 20% to 25% down payment. However, if the home buyer puts that extra 5% down payment, the Jumbo mortgage rates will be lower since the Jumbo mortgage lender has less risk. Same with credit scores. To qualify for a Jumbo mortgage loan, the bare minimum credit score required is normally 700 credit score. However, a 700 credit score is considered a super low credit score when it comes to Jumbo mortgages.

Loan Level Pricing Adjustments On Jumbo Mortgages

There are price adjustments for every 20 points on Jumbo mortgage rates. A person who has a 720 credit score will pay a higher Jumbo mortgage rate than a person with a credit score of 740 or higher. Most Jumbo mortgage lenders will cap the maximum debt to income ratios at 40% DTI for Jumbo mortgage loan applicants. Gustan Cho Associates has a traditional jumbo mortgage program that will cap debt to income ratio on jumbo loans at 50% loan to value.

Traditional 10% Down Payment Jumbo Loans: 90% LTV Jumbo Mortgages With No PMI Required

10% Down Payment Jumbo Loan Program Gustan Cho Associates now offers both traditional and NON-QM Jumbo Loans with a 10% down payment with no private mortgage insurance required. No income tax returns are required on NON-QM Loans for self-employed borrowers. The minimum credit scores required are 720 to qualify for non-QM jumbo loans. with a 10% down payment. To qualify please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] Gustan Cho Associates has a national reputation for not having lender overlays on government and conventional loans. Gustan Cho Associates also has a national reputation for being a one-stop mortgage shop for having dozens of non-QM and alternative mortgage programs on owner-occupant homes, second home financing, and investment properties. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.  

What Loan Limit Constitutes Jumbo Loans?

 Mortgage loans that exceed Fannie Mae and Freddie Mac’s conforming mortgage lending limits of $647,200 are known as non-conforming mortgage loans or Jumbo Home Loans. Gustan Cho Associates now offers NON-QM Jumbo Home Loans for self-employed borrowers. No income tax returns are required on the 12-month bank statement Non-QM Jumbo Loan Program for self-employed borrowers.

12-Month Bank Statement Loans

12 months bank statements are averaged to derive monthly income. Only deposits are averaged. Withdrawals do not matter. 10% to 20% down payment required. The lower the credit score, the higher the down payment requirements.  Down Payment depends on borrowers’ credit scores. The minimum credit score required on non-QM jumbo loans is 550 with a 40% down payment. No private mortgage insurance is required. Up to 50% debt to income ratio with compensating factors. There is no loan limit. The larger the loan size is the larger the down payment requirement. Verification of mortgage and/or verification of rent is required on non-QM bank statement loans for self-employed borrowers.

Jumbo Non-QM Loans One Day Out of Bankruptcy and Foreclosure

Great news with NON-QM Jumbo Home Loans is there is no waiting period after housing event and/or bankruptcy. Traditional Jumbo Mortgages require 7 year waiting period after housing event and/or bankruptcy. In this article, we will cover and discuss Jumbo Home Loans Lending Guidelines On Non-QM Mortgages. Non-QM Jumbo Loans have much lenient loan guidelines versus traditional jumbo mortgages.

Comeback Of NON-QM Mortgages After 2008 Real Estate Meltdown

After the 2008 housing market meltdown, Jumbo lenders took a major hit with thousands of foreclosures. Many Jumbo mortgage lenders offered stated income/no-doc Jumbo home loans. This was offered as long as the home buyer had at least a 20% down payment. It was fairly easy to get a Jumbo mortgage. Unfortunately, the historical high foreclosure rates affected the higher-end homes. Many of those homes plummeted more than 20% of their values during the real estate market collapse. The real estate crisis left many Jumbo lenders losing millions if not billions of dollars. After the housing collapse, Jumbo lenders eliminated the stated income/no doc mortgage lending program.

Non-QM Jumbo Mortgage Lenders

All Jumbo lenders set extremely high credit and income standards. 25% down payment and 740 scores and no greater than 40% debt to income ratios were the norm to qualify for a Jumbo mortgage post the real estate meltdown. Most Jumbo lenders also required borrowers to have at least one year of reserves. Many self-employed homebuyers of the high-end homes were disqualified due to them taking substantial write off on their income tax returns. Self-employed folks are allowed to take substantial write-offs on their income tax returns.

Unreimbursed Business Expenses

Taking advantage of a lot of unreimbursed business expenses is one of the rewards and benefits of being a self-employed wage earner. However, unreimbursed business expenses often disqualify self-employed wage earners from qualifying for a home mortgage. Lenders use adjusted gross income when calculating qualified income on self-employed wage earners. A bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale were not permitted in order to qualify for a Jumbo mortgage. However, Gustan Cho Associates offers one day out of bankruptcy and/or foreclosure non-QM mortgage loan programs.

Risk For Lenders With Jumbo Home Loans

Jumbo Home Loans are viewed riskier in the eyes of any mortgage lender. Higher-end homes are tougher to sell. It also takes longer to sell in the marketplace in general. It is also tougher to qualify for jumbo home loans than a conventional mortgage loan or government loans such as FHA, VA, or USDA. There are cases where high-end homes are listed in the marketplace for over a year without a single showing. Higher-end homes are normally custom homes that are custom built to suit the homeowner’s needs. A home buyer who is qualified to purchase a high-end home will be pickier on the home he or she chooses than a home buyer who only has a certain budget on a home purchase. A high-end home buyer normally has the means to build his or her own home. High-end home buyers build their homes to their liking and tastes. If a jumbo lender forecloses on a high-end luxury home, the home can sit for a long time. Due to these reasons, jumbo loans are considered riskier loans. Higher risk means higher interest rates.

High Risk Means Higher Rates And Tougher Lending Guidelines

High Risk Means Higher Rates And Tougher Lending

Since Jumbo Home Loans are considered high risk, most lenders require borrowers to meet the following standards:

  • Higher credit scores
  • Lower debt to income ratios
  • Lower loan to values
  • Reserves
  • Most Jumbo lenders have a 740 score credit requirement
  • Maximum 40% debt to income ratio cap
  • 80% loan to value
  • One year of housing payment reserves which consists of principal, interest, taxes, and insurance

A large percentage of Jumbo lenders even have a 75% loan to value requirements.

Special NON-QM Jumbo Home Loans

We now have eased mortgage lending requirements to qualify for Jumbo mortgages. Gustan Cho Associates not only has a national five-reputation as a mortgage company licensed in multiple states with no lender overlays on government and conventional loans but we offer dozens of different non-QM loan programs. Gustan Cho Associates now offers NON-QM Jumbo Home Loans for self-employed borrowers: No income tax returns required. We just go off 12 months bank statement deposits. Up to 50% debt to income ratios.

Non-QM Jumbo Mortgages For Owner-Occupant Homes, Second Homes, Investment Properties

GCA Mortgage Group offers non-QM loans on primary owner-occupant homes, second homes, and investment properties. Gustan Cho Associates has many non-QM investment property loan programs for real estate investors. Our fix and flip loan program for real estate investors are one of our most popular loan programs. Gustan Cho Associates offers asset-depletion, P and L statement only investment loan programs, and countless other alternative finance home mortgage programs. Over 30% of our borrowers are folks in need of Non-QM loans and alternative financing mortgage programs.

Non-QM Jumbo Mortgage Guidelines

Non-QM Jumbo Mortgage Guidelines Gustan Cho Associates has dozens of Non-QM wholesale lending partners. There are no set mortgage guidelines on Non-QM loans. Our Non-QM wholesale lending investors often can make exceptions to their mortgage guidelines. The deal needs to make sense. If a non-QM borrower does not meet the specific lender’s wholesale guidelines but has other compensating factors, the wholesale investor will take the borrower’s case scenario on a case-by-case basis.

Jumbo Loans With 620 Credit Scores

We now offer Jumbo loans for high-end homebuyers with a minimum 620 credit score. However, the lower the credit scores, the higher the down payment requirements. We also have a special 10% down payment Jumbo loan program for borrowers with at least 720 credit scores. No mortgage insurance is required with all non-QM loans. No Tax Returns Required. The 90% loan-to-value Jumbo mortgage loan program has tougher lending guidelines since the Jumbo mortgage investor has a higher risk. To qualify for the 10% down payment NON-QM Jumbo Loans, the mortgage loan applicant needs at least a 720 credit score. Maximum of 50% debt to income ratio with compensating factors. No late payment history in the past 12 months on non-QM loan programs. Verification Of Rent and/or Verification Of Mortgage Required. No Private Mortgage Insurance Required. There is no mandatory waiting period after housing events and/or bankruptcy.

Qualifying For Non-QM Jumbo Home Loans

High-End Home Buyers who need to qualify for NON-QM Jumbo Home Loans for self-employed borrowers can contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] Over 30% of our business is helping our mortgage borrowers with Non-QM loans. Gustan Cho Associates is affiliated with over two dozen non-QM wholesale lending partners/investors. If there is a non-QM loan program in the market, Gustan Cho Associates has it. Our team of licensed and support personnel at Gustan Cho Associates are available 7 days a week, evenings, weekends, and holidays.    

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