Non-QM Jumbo Mortgages For Self Employed Borrowers


Non-QM Jumbo Mortgages For Self Employed Borrowers

This BLOG On Non-QM Jumbo Mortgages For Self Employed Borrowers Was UPDATED On April 13th, 2019

There are mortgage loan limits set on the various mortgage loan programs. The Gustan Cho Team now offers non-qm jumbo mortgages for self-employed borrowers with credit scores as low as 620. No income tax returns are required. 10% to 20% down payment. Amount of down payment required depends on borrowers credit scores. How we calculate income is averaging 24 months of bank statement deposits and that monthly average is the borrower’s monthly income. Withdrawals do not matter and do not count. Up to 50% debt to income ratios. Now self-employed borrowers who have a lot of write offs on their tax returns can qualify for non-qm jumbo mortgages with no tax returns.

Loan Limits On Home Loans

Conventional Loans and Government Loans have maximum loan limits. Any loan amount exceeding loan limits are called non-conforming loans or jumbo loans:

  • For example, FHA standard loan limits are capped at $314,827 unless the property is located in a high-cost area
  • For example, FHA loan limits in Sarasota, Tampa, and surrounding areas are capped at $314,827 whereas areas in Palm Beach County, Miami Dade County are at capped at $345,000
  • The higher FHA loan limits are set by HUD, the parent of FHA, in counties that are classified as high-cost areas
  • For conventional loans, the Federal Home Loan Mortgage Corporation, Freddie Mac, and the Federal National Mortgage Association regulate the home loan industry
  • FHFA, The Federal Housing Finance Agency, is the governmental agency that regulates Fannie Mae and Freddie Mac set conforming loan limits
  • Fannie Mae and Freddie Mac regulate conforming guidelines and set maximum lending limits
  • Today, the maximum conventional loan limits are capped at $484,250 in most counties in the United States
  • Standards set by Fannie Mae and Freddie Mac are secured by FHFA and are called conforming loans
  • Any mortgage loans that fall outside the conforming lending limits are classified as non-conforming loan or JUMBO MORTGAGES

What Are Jumbo Mortgages?

Jumbo Mortgages are residential mortgage loans that fall over the maximum lending limits set by FHFA.  It is called non conforming loans since it does not conform to the government’s maximum lending limit.

  • Any mortgage loan over the maximum lending conforming limit of $484,350 is considered a Jumbo mortgage
  • Jumbo mortgages normally have higher interest rates
  • Qualifications are much tougher than conforming loans
  • To get approved for Jumbo mortgages, the home needs to appraise
  • The appraiser needs comparable sales of the higher priced homes
  • Home Buyers can not have a white elephant where most of the homeowners in the neighborhood have standard conforming loans because it will be difficult to get comparable sales
  • If the house is the only high-end home that is larger and more expensive than the norm, it will be difficult for the appraiser to get comparable sales
  • Most folks who seek Jumbo mortgages need to put 20% down payment
  • Most jumbo lenders require credit scores 700 or higher
  • Maximum debt to income ratios are capped at 45%
  • Jumbo borrowers who are seeking the best available interest rates need credit scores of 740 FICO or higher and loan to value at 75%
  • Jumbo mortgage interest rates are normally 050% higher than regular conforming interest rates

Conforming Loan Limits

Conforming loan limits set by Fannie Mae and Freddie Mac for 2019 is capped at $484,350 on counties that are not classified as high-cost areas.

  • For two-unit buildings, the maximum conforming limit is capped at $580,150
  • For three unit buildings, the maximum conforming limit is capped at $701,250
  • $871,450 is the maximum amount for a 4 unit property for a conforming loan
  • Conforming limits are capped at higher amounts for Hawaii, Alaska, Guam, and the United States Virgin Islands
  • For these areas, the maximum conforming lending limit for a single-family home is $679,650
  • For two-unit residential properties, it is $870,225
  • For three unit properties, it is capped at $1,051,875
  • For four-unit properties, it is capped at $1,307,175

Non-QM Mortgages Versus Jumbo Mortgage Lending Guidelines

Non-QM Mortgages has much more lenient lending guidelines than traditional jumbo loans. Jumbo Mortgages have tougher mortgage lending criteria than conventional mortgage loans.  There is no waiting period after foreclosure, deed in lieu of foreclosure, short sale to qualify for NON-QM Jumbo Mortgages. Borrowers with 620 credit scores can qualify for non-qm jumbo mortgages where traditional jumbo lenders want 700 credit scores. 10% to 20% down payment is required on jumbo non-qm jumbo mortgages where most traditional jumbo lenders want 20% to 25% down payment. There is no mortgage insurance required on jumbo non-qm jumbo mortgages even with higher than 80% loan to value.

  • Interest rates on Non-QM Jumbo mortgages are slightly higher than traditional jumbo loans
  • Most Jumbo mortgage lenders require a minimum of 20% to 25% down payment on a home purchase
  • To get the best Jumbo mortgage interest rates, the Jumbo mortgage loan borrower should have at least a 740 credit score, have 25% down payment, have no more than a 40% debt to income ratio, and have reserves on traditional jumbo loans
  • However, NON-QM Jumbo Mortgages with lower credit scores
  • 10% to 20% down payment
  • 50% debt to income ratio caps on non-qm jumbo mortgages
  • The down payment requirements depend on borrowers credit scores

Special NON-QM Jumbo Mortgages For Self Employed Borrowers

We now offer a 10% down payment, 90% loan to value, with no private mortgage insurance required to qualified borrowers. Non-QM Mortgages for self-employed borrowers is a special jumbo loan program where no tax returns are required. 24 months of bank statement deposits are averaged and the monthly deposits are used as monthly income. Borrowers can use personal and/or business bank statements. 100% of deposits can be used on personal bank statements. 50% of deposits are used on business bank statements. Needs to be from the same bank account and multiple bank statements are not allowed. Overdrafts are not allowed.

  • To qualify, the Jumbo mortgage loan borrower needs to have a minimum credit score of 620
  • The borrower’s debt to income ratios cannot be greater than 50% DTI
  • Private mortgage insurance is not required on non-qm jumbo mortgages with higher than 80% LTV
  • The Jumbo mortgage lender wants to see a strong credit borrower with ample reserves and assets

80/10/10 Mortgage Loan Programs For Jumbo Home Buyers

An alternative to Jumbo mortgage loans is the 80/10/10 mortgage loan program. This is where the home buyer who wants to purchase a higher priced home that exceeds the $484,350  conforming limit caps can get a first conventional loan and get a second mortgage.

  • As long as the home buyer can put a 10% down payment and get a $484,350 conforming loan approved, the difference can be funded from a second mortgage
  • However, most second mortgage lenders want a 700 credit score and debt to income ratio not exceeding 43%

Home Buyers interested in qualifying for NON-QM Jumbo Mortgages, please contact The Gustan Cho Team at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays.

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