Jumbo Loans After Bankruptcy Mortgage Loan Options

In this article, we will cover and discuss how to qualify for jumbo loans after bankruptcy. There are various government, conventional, and non-QM jumbo loans after bankruptcy mortgage loan options for homebuyers and homeowners needing to refinance. We will discuss and cover How To Qualify For Jumbo Loan After Bankruptcy. There are waiting period requirements in qualifying for jumbo loans after bankruptcy depending on the mortgage lender.

What Are Jumbo Loans?

What Are Jumbo Loans?

Jumbo Loans are portfolio loans that do not have to meet government and/or conventional lending guidelines. Jumbo Mortgages were launched a few years ago for the first time after the 2008 real estate meltdown. After the real estate and banking collapse of 2008, subprime and alternative financing came to an abrupt halt.

Jumbos are mortgage loans that exceed the maximum loan limit set by the Federal Housing Finance Agency (FHFA). Jumbo loans are used to finance luxury properties and homes in high-priced real estate markets.

The maximum loan limit for conforming loans is $647,200, while the limit for jumbo loans is $10 million. Jumbo loans typically have higher interest rates than conforming loans because they are more complex and involve more risk.

If you’re considering a jumbo loan,  here are the benefits of jumbo loans you should know before applying for a loan:

  • You can finance a luxury home: If you’re looking to buy a high-end property, a jumbo loan can help you finance the purchase.
  • You can avoid private mortgage insurance (PMI): Jumbo loans typically don’t require PMI, which can save you hundreds of dollars each month.
  • You may qualify for a lower interest rate: Interest rates on jumbo loans are often lower than rates on conforming loans.

Here are Jumbo mortgage loans drawbacks you need to know about 

  • You may need a higher credit score: To qualify for a jumbo loan, you’ll typically need a credit score of 700 or higher.
  • You’ll need a larger down payment: Jumbo loans typically require a down payment of 20% or more.
  • You may face stricter underwriting standards: Jumbo loans are considered riskier than conforming loans, so you’ll need to meet stricter underwriting standards to qualify.

What Are Subprime Lenders?

Subprime lenders and portfolio lenders like Washington Mutual went out of business literally overnight. Bank statement loan programs for self-employed borrowers discontinued. Many self-employed borrowers who relied on bank statement loans with no income tax returns required could no longer qualify for Jumbo loans after bankruptcy.

You Can Still Get a Jumbo Loan After Bankruptcy 

You might still qualify still for a jumbo loan after bankruptcy but you need to pass all lender requirements. Self-employed borrowers could qualify for bank statement loans for self-employed borrowers. Jumbo mortgage loan program for clients who filed for bankruptcy is coming back.

What Are Requirements For Jumbo Loans When You Had Bankruptcy

Non-QM Mortgages are owner-occupant primary home and investment property real estate mortgage programs that do not have to meet government and/or conventional mortgage guidelines. Non-QM jumbo mortgage loans do not have any waiting period requirements after bankruptcy and foreclosure. Non-QM jumbo mortgage loans are mortgages for borrowers who do not meet government and/or conforming mortgage guidelines. There is no private mortgage insurance required on Non-QM jumbo mortgage loans.

Non-QM Jumbo Loans After Bankruptcy Loan Limits

There is no maximum loan limit with Non-QM jumbo mortgage loans. Borrowers with late payments in the past 12 months can qualify for a mortgage with Non-QM Loans. Self-Employed Borrowers can qualify for Non-QM Jumbo Mortgage Loans with credit scores down to 500 FICO.

Bank Statement Mortgages for Self-Employed Borrowers do not require any income tax returns. Borrowers can qualify for Non-QM Jumbo Mortgage Loans with late payments in the past 12 months. This includes mortgage late payments in the past 12 months. We go by the average monthly deposits of the borrower in the past 12 months.

Jumbo Non-QM Mortgage Versus Traditional Jumbo Loans

Traditional Jumbo loans require a 700 minimum credit score. Traditional Jumbo Mortgages have mandatory waiting period requirements of 7 years after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale. However, Non-QM Jumbo loans do not have tough lending requirements. Traditional jumbo mortgages do. The minimum credit score requirement on Non-QM loans is 500 FICO.

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

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

The lower the borrower’s credit score the higher the down payment and mortgage interest rate. There are no minimum waiting period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. There is no private mortgage insurance required. Capital Lending Network, Inc. offers Non-QM Jumbo loans one day out of bankruptcy and/or foreclosure.

Down Payment Requirements on Non-QM Jumbo Loans After Bankruptcy

Down payment requirements on Non-QM Jumbo loans are 10% to 30%. The higher the borrower’s credit scores, the lower the down payment requirement. The lower the borrower’s credit scores, the higher the down payment requirement. The lower the credit scores and down payment, the higher the mortgage interest rates on Non-QM loans. Most Traditional Jumbo Lenders will require a maximum of 43% debt to income ratios.

NON-QM Jumbo Loans After Bankruptcy and Mortgage Guidelines

Jumbo Non-QM Mortgage Guidelines are not a set uniform. It is no secret in the real estate industry that property values are once again on the rise. Some experts believe they are rising too fast. The American people hope we learned our lesson from the real estate crash of 2008.

Loan Limit on FHA, VA, and Conventional High-Balance Loans

Loan Limit on FHA, VA, and Conventional High-Balance Loans

As home values continue to rise, so does the conforming loan limit threshold. However, many homes in our country will still require a jumbo mortgage to purchase. FHA and Conforming loan limits for 2022 are capped at $970,800 for single-family homes. VA loans do not have maximum loan limits as of 2020. In this blog, we will explain what a jumbo mortgage means, and detail a few jumbo mortgage options we have for individuals with troubled credit, and how to apply for a jumbo mortgage with Capital Lending Network. We will discuss and cover jumbo Non-QM mortgage guidelines With Bad Credit.

Jumbo Non-QM Mortgage Guidelines With Bad Credit For High-End Homebuyers

Some of our clients are not aware of the term “jumbo mortgage”. A jumbo mortgage is defined as any loan amount of one dollar over the conforming loan limit of a specific county. Most counties across the nation now have a conforming loan limit of $647,200. And the FHA loan limit is smaller in most counties, the standard FHA loan limit is $420,680  for 2022.  These amounts are set every calendar year by the Federal Housing Finance Agency (FHFA). They get annual home price index data from across the nation and change the loan limit according to those reports.

Skyrocketing Home Prices Are Hurting Homebuyers Get Priced Out of the Housing Market

Home prices have been skyrocketing the past few years. The booming housing market is pricing many homebuyers out of the housing market. For the most recent years, we have seen an increase in the conforming loan limits, due to home price indexes increasing across the nation. The increase from 2020 to 2021 was about 6%. It raised from $510,400 to $647,200 in non-high balance counties. Then the increase for conforming loans went up to $647,200.

High-Balance Loans in High-Cost Areas

High-Balance Loans in High-Cost Areas

There are areas such as Los Angeles County, California that are considered “high-balance”, where the home price index exceeds the nation’s median. These areas can have conforming loan limits as high as 150% of the median. For 2022, the MAX high-balance conforming loan limit was $970,800 (150% of $647,200).

Jumbo FHA and Conforming Loans

In a county such as Los Angeles, any loan above $970,800 was considered a jumbo mortgage in 2022.  The high-balance conforming loan limit for Los Angeles County went up for 2022. The new 2022 high-balance conforming loan limit for Los Angeles County is $970,800.

Purchasing High-End Home with Jumbo Loans After Bankruptcy

Purchasing a home with a jumbo mortgage can’t be quite difficult. The qualifications for a standard jumbo loan are astronomical. Typically, you will need a 720 credit score, 20% down payment, debt-income ratio below 41%, and 12 months of reserves in your bank after closing. One month of reserves is equal to one month of mortgage payments as liquid capital and must be verified during the underwriting process.

Reserves on Jumbo Loans After Bankruptcy

Bankruptcy Chapter 13 VS Chapter 7 Infographic

Some jumbo products require up to 18 months of reserves. Since these mortgage loans are ineligible to be sold to Freddie Mac and Fannie Mae, each individual lender can set their own jumbo guidelines. The banks lost a ton of money in this market during the crash of 2008, so their guidelines are very strict. As you can see the majority of Americans will not qualify for a standard jumbo mortgage product.

Jumbo Non-QM Mortgage Guidelines For Lower Credit Score Borrowers

How to qualify for a jumbo mortgage with less than perfect credit? We have a wide selection of jumbo mortgage products available for our clients. Many of them are not as strict as your standard jumbo mortgage. We will now detail a few low programs we have available with a credit score lower than 720.

Extended Jumbo Mortgage:

  • We are set up with a few investors who will allow a standard jumbo mortgage down to a 680 credit score
  • These loans are still very tough to qualify for and will require a 20% down payment (sometimes more) with credit scores below 720
  • Please keep in mind this mortgage product does follow the typical jumbo guideline criteria and will require 12 months of liquid cash reserves after the high down payment

Still a rare jumbo product because it allows a lower credit score option.

Jumbo Loans After Bankruptcy: Non-QM Versus Traditional QM Jumbo Mortgages

NON-QM jumbo mortgage:

  • Over the past few years, we have seen a resurgence of NON-QM mortgage lending
  • NON-QM stands for a “non-qualified” mortgage. In layman’s terms, these mortgage products do not follow Fannie Mae or Freddie Mac guidelines
  • The investor will have their own guidelines for each mortgage product

This opens up jumbo mortgage financing to credit scores all the way down to 580.

Using Non-QM Jumbo Loans After Bankruptcy Versus Traditional Mortgages

Using Non-QM Jumbo Loans After Bankruptcy

When do borrowers use NON-QM?

  • Recent derogatory credit events
  • Mortgage late payments
  • Foreclosure in the past 7 years
  • Recent short sale
  • Recent deed in lieu
  • Recent bankruptcy

Most standard jumbo products will have a 24-month waiting period if you are late payment on your mortgage (or rent) and up to an 8-year waiting period for foreclosures, short sales, and bankruptcies. These NON-QM loan products will allow you and your family to be homeowners before the lengthy waiting period for standard jumbo mortgages.

Jumbo Loan After Bankruptcy Guidelines For Self-Employed Borrowers

Another popular time to utilize a NON-QM jumbo mortgage is for our self-employed borrowers. It can be next to impossible to file your federal tax returns to show enough income to qualify for a jumbo mortgage. This is when a bank statement option is a great idea.

Non-QM Jumbo Lenders Experts in Jumbo Loans After Bankruptcy 

Capital Lending Network offers BANK STATEMENT LOANS for self-employed borrowers with a credit score all the way down to 600 for jumbo mortgage financing. An underwriter will calculate your business-related deposits shown on your bank statements over a 12 or 24-month period.

Generally speaking, they will count 50% of all business-related deposits. The other 50% is estimated to be business-related expenses. Your tax returns are not involved in this transaction, making this a very attractive program for our self-employed clientele.

Jumbo Non-QM Mortgage Guidelines On Reserve Requirements

Jumbo Non-QM Mortgage Guidelines On Reserve Requirements

NON-QM mortgage options also have a lower reserve requirement, making this an attractive loan product for jumbo mortgage borrowers. It can be next to impossible to save for the down payment, having additional cash reserves at the end of the transaction can be tough. Most NON-QM loan products only require 3 or 6 months of reserves. We have also been able to get a reserve waiver in the past. A NON-QM mortgage underwriter has the ability to view each file on a case-by-case basis and make exceptions based on other qualifications.

Starting The Jumbo Loan After Bankruptcy Mortgage Process

Capital Lending Network makes the application process as easy as possible. Please call us at 800-900-8569 or get your loan process started and you will have a brief mortgage consultation to make sure you will fit into the jumbo mortgage qualifications. Assuming that the call goes well, an application link will be sent to you from a loan officer licensed in your state. You will need to complete the application link and send in the required documentation.

That documentation will vary based on the loan program. Once your loan officer has your credit report verified and all of your income and asset documentation, they will complete the pre-approval process. From there the home-buying process is the same as a standard mortgage product.

Getting Qualified and Pre-Approved on Jumbo Loans After Bankruptcy

As you can gather from reading this article, we are experts in jumbo mortgage qualifications. We offer numerous different standard jumbo mortgages as well as a full line of NON-QM jumbo mortgages. We pride ourselves on customer service and are available 7 days a week, including holidays. 

Peter has 7+ years of experience in residential lending. He is a licensed Realtor in the Chicagoland area.