What Are Jumbo Loans? Jumbo Mortgage Loans Explained
Jumbo mortgage loans are home loans that are larger than the conforming loan limit of $548,250. Lenders of jumbo mortgage loans have higher lending standards than government and/or conventional loans. Jumbo mortgages are considered riskier loans than conforming loans. It takes substantially longer to sell a higher-priced property than a traditional home with an average price in the event the lender forecloses on the borrower. Some higher-priced homes can take many months or years to liquidate. Due to the layered risk levels of the collateral, lenders will have higher lending guidelines for borrowers of jumbo loans. There are no federal government agencies or GSEs backing jumbo mortgages. There is more emphasis targeted on the property with jumbo mortgages. Lenders want to know a lot more about the property if the home is a higher-end custom home. The higher the price of the home is, the greater risks the collateral poses to the lender. Many lenders may require two appraisals on a jumbo loan. The higher the risk, the higher the rewards. This holds true on jumbo loans. Therefore, mortgage rates on jumbo home loans are substantially higher than government and/or conventional loans. Lenders will require higher lending standards including higher credit scores, and larger down payments on jumbo mortgages. Jumbo loans are commonly referred to as non-conforming loans because they exceed the conforming loan limits. Lenders may keep the jumbo mortgages they fund or sell them on the secondary market to larger banks, institutional investors, hedge funds, or other financial institutions.
FHA And VA High-Balance Jumbo Mortgages
FHA and VA loans offer high-balance mortgages. FHA and VA loans have higher loan limits in high-cost areas. Any mortgage loan that surpasses the maximum loan limits in traditional areas on FHA and VA loans are called high-balance FHA and/or VA loans. Maximum FHA Jumbo Loans in high-cost areas are capped at $822,375. However, high-cost FHA loan limits depend on the county. HUD sets the maximum loan limits on high-cost areas. VA loans do not have a maximum loan limit on VA loans. However, loans over the conforming loan limits are called high-balance VA loans. Pricing is higher and it is a little more difficult to get an approve/eligible per automated underwriting system. To see what the conforming loan limits are on conventional loans, please check this FHFA map.
Borrowers Who Need A Jumbo Mortgage Loan
Housing prices are rising faster than the conforming loan limit increases. Both HUD and the FHFA have been increasing FHA and conforming loan limits for five years in a row and are likely to increase it again for 2022. Many homebuyers are getting priced out of the housing market because the loan amount they need is higher than the maximum conforming loan limit. This is when they need to get jumbo loans. Jumbo mortgages are not necessarily for homebuyers who are buying large exotic custom homes. Home prices vary depending on the city and state. Some average homes in San Francisco or other cities with expensive housing markets can exceed $1 million dollars. You are not talking about a mansion. Average 2,000 square feet homes can far exceed the conforming loan limit in expensive cities. Therefore, homebuyers need to qualify for a jumbo loan. Capital Lending Network, Inc. offers a wide variety of jumbo loan programs for homebuyers of expensive homes.
General Lending Requirements On Jumbo Loans
Every lender has its lending requirements and guidelines on jumbo loans. However, lenders, in general, have higher credit score requirements and larger down payment requirements. Jumbo mortgages are for primary owner-occupant homes, second homes, and investment properties. Typical down payments on jumbo mortgages are 20% to 30%. Most traditional lenders will require a 700 FICO or higher credit score and debt to income ratio not exceeding 41% DTI. Gustan Cho Associates dba Capital Lending Network has specialty jumbo mortgage loan programs that we will discuss in this article.
Traditional 90% LTV Jumbo Mortgages
Gustan Cho Associates dba Capital Lending Network, Inc. offers a traditional jumbo loan program that only requires a 10% down payment. The maximum debt to income ratio required is capped at 50% DTI. The minimum credit score on the 90% LTV jumbo loan program is 660 FICO. The maximum loan limit is up to $2.0 million. Homeowners can get a 90% LTV mortgage on a cash-out to refinance. The maximum cash-out amount is $500,000. The 10% down payment jumbo loan program is available to first-time homebuyers.
The 90% LTV jumbo loan program is available for the following property types:
- Single-family homes
- 1-4 Unit owner-occupied or multi-family investment properties
- Non-warrantable condos are eligible (though some restrictions apply)
Our traditional 10% down payment jumbo mortgage loan program is one of the most popular loan programs for homebuyers.
Non-QM Jumbo Mortgages
Non-QM jumbo mortgages are non-traditional loan programs primarily for self-employed borrowers. CLN Mortgage now offers no-doc mortgages, bank statement loans for self-employed borrowers, asset-depletion loans, P and L stated income loans, and non-QM jumbo mortgages with credit scores down to 500 FICO. Non-QM mortgages do not require any waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale. Mortgage rates on non-QM loans depend on the borrower’s credit scores and down payment. Capital Lending Network, Inc. offers non-QM mortgages one day out of bankruptcy and foreclosure with no maximum loan limit. Many folks recover sooner than others after bankruptcy and/or a housing event. The down payment required is 30% if the bankruptcy and/or foreclosure has not been seasoned for one year. The longer the bankruptcy and foreclosure ages, the lower the down payment requirement. The lower the risk of the lender, the lower the mortgage rates. To qualify for the various jumbo loan program at Gustan Cho Associates dba Capital Lending Network, Inc. please contact us at 262-716-8151 or email us at firstname.lastname@example.org. Text us for a faster response. The team at Capital Lending Network, Inc. is available 7 days a week, evenings, weekends, holidays.