Advice In Qualifying For A Jumbo Mortgage

By Gustan Cho

A conforming mortgage loan is any residential mortgage loan that conforms to Fannie Mae and Freddie Mac mortgage lending guidelines and have a maximum mortgage lending cap of $417,000 unless the property is in a high cost area.  Any residential mortgage loan that is higher than $417,000 is called a non-conforming mortgage loan, or a Jumbo Mortgage.  A Jumbo Home Mortgage loan exceeds the conforming lending limit set by Fannie Mae and Freddie Mac.  Fannie Mae and Freddie Mac purchase the majority of the residential mortgage loans originated by mortgage lenders in the United States and in order for them to purchase loans from private lenders, the mortgage loans need to conform to their lending guidelines.
 Jumbo lending requirements depends on the individual Jumbo lenders but generally, Jumbo home lending standards are much tougher than any other mortgage loan programs out theres.  Jumbo lenders normally require much higher credit scores,  higher down payment requirements, have reserve requirements, and often have higher closing costs and higher interest rates than conventional loan programs.

Requirements In Qualifying For A Jumbo Mortgage

Jumbo Mortgages are considered high risk.  Jumbo Mortgages are on higher end homes and if a Jumbo home lender defaults on their Jumbo Mortgages, it may take some time for the Jumbo lender to liquidate the property.  Higher end homes generally take longer to sell since they are normally custom homes than tract homes.
Jumbo Lenders need to offset this risk by counting that they have a strong borrower with a good payment history and higher credit scores and high income.  High credit scores and strong payment history proves that the borrower is financial responsible and high income and job longevity proves that the borrower will not have any problems in paying his or her Jumbo Mortgage payments in the future.  Jumbo Mortgage lenders are not real estate investors.  They do not want the high end property.  They just want the Jumbo Mortgage Loan Borrower to make good on their Jumbo mortgage loan payments.  Jumbo Mortgage Lenders normally require a minimum credit score of 680 FICO and a debt to income ratio of 40% so that they can comfortably pay their Jumbo Mortgage payments without any strain every month.

Qualifying For A Jumbo Mortgage With Late Payments

Jumbo mortgage lenders frown on late payments and most Jumbo lenders with want to see timely payments in the past 24 months.  Jumbo mortgage lenders normally frown on gaps in employment.  They want to see that the Jumbo mortgage loan applicant has been in the same job for the past 24 months and in the same line of work for the past 4 years or more.  Prior bankruptcy and foreclosure is normally frowned upon and most Jumbo mortgage lenders will not lend to anyone who had a bankruptcy or foreclosure in the past 7 years and some will go as far back as 10 years.

Down Payment Requirements In Qualifying For A Jumbo Mortgage

Most Jumbo mortgage lenders require a minimum of 20% down payment on a home purchase.  To get the best available Jumbo mortgage rates, a Jumbo mortgage applicant should plan on having a 25% down payment and a 740 FICO  credit score with a maximum debt to income ratio of 40%.  Jumbo mortgage lenders also want to see that the mortgage loan applicant has at least a one year cash reserve that covers principal, interest, taxes, and insurance and a strong financial statement.

Qualifying For A Jumbo Mortgage: Types Of Jumbo Loan Programs

Jumbo Mortgage loans are mainly for primary owner occupant homes.  There are a few portfolio Jumbo mortgage lenders that will do second home Jumbo mortgage loans but the Jumbo mortgage loan borrower needs to have extreme strong financials which consist of high credit scores, strong income, strong assets, reserves, and strong solid compensating factors.

10% Down Payment, 90% Loan To Value, No Mortgage Insurance Jumbo Mortgage Loan Program

I can offer qualified high end home buyers a special 10% down payment, 90% loan to value, with no mortgage insurance Jumbo mortgage loan.  However, the Jumbo mortgage loan borrower needs to be a strong borrower.  Minimum credit score required is 740 FICO, maximum debt to income ratio needs to be no greater than 40% loan to value.  Interest rates on the 10% down payment Jumbo mortgage loan program is slightly higher than the 20% down payment Jumbo mortgage loan program.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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