What is a jumbo loan?
Jumbo mortgage loans are loans with amounts that exceed the maximum amount that Fannie Mae and Freddie Mac will buy. There are different loan thresholds for VA jumbo loans, as well as FHA and USDA. Jumbo mortgage loans are offered by banks and non-depository mortgage lenders. Each lender has established a maximum jumbo loan limit amount for mortgages, whether purchase or refinance. Jumbo loan interest rates and mortgage criteria vary widely among the lenders that offer them. This is due to various underwriting practices employed by lenders; some may use non-traditional income, asset depletion, bank statements and pledged assets instead of W-2 earnings. Others employ traditional underwriting to qualify the borrower. Some non-bank lenders offer interest rates that compete with banks while others are several points higher. These higher mortgage rates accommodate the risk of the large loan amount that’s underwritten with criteria that’s looser than that of a bank.
There are also Super Jumbo loans, often defined as loans for more than $5,000,000.
By definition, a jumbo loan is not a qualified mortgage under the Consumer Financial Protection Bureau (CFPB) rules. Non-QM lenders will often take these loans on. There are also prime lenders that make jumbo loans for prime credit-grade borrowers. Often these are portfolio lenders that write and service the loans.
What are common uses of Jumbo Loans?
- Purchase a residential 1-4 unit property
- Refinance a residential 1-4 unit property
- Cash-out refinance a residential 1-4 unit property
What are some types of Jumbo Mortgage Loans?
- 720 minimum FICO score, jumbo loan amount to $3,000,000
- 680 minimum FICO score, 1-4 unit, co-ops and condotels, up to $3,000,000 with 3/1, 5/1 and 7/1 ARMs
- Equity underwritten with no minimum FICO up to 60% LTV
- Conventional, asset-depletion and pledged-asset underwritten portfolio jumbo loans available to citizens, foreign nationals and resident aliens
- 5% down payment, 500 minimum FICO, 50% DTI, up to $2,000,000, jumbo loan rates starting at 5.75%
- Fixed interest rate loans up to $6,000,000 with 640 minimum FICO, bankruptcy, foreclosure and short sale history allowed
- $5,000,000 maximum amount on nonowner occupied single family residence up to 70% LTV for purchase and up to 65% LTV to refinance jumbo loans
- Fast funding with up to $20,000,000 loan size
- Up to $2,000,000 loan, nonowner occupied, 70% LTV, stated documentation, no points
- Purchase, refinance or cash-out, 24 months credit even seasoning, 70% LTV to $1,500,000 and 55% DTI
- No FC/SS/BK seasoning for purchase or refinance with 500 minimum FICO, 75% LTV, up to $1,000,000
- 5 years interest only, fixed or adjustable, 620 minimum FICO, 52% DTI, 50% LTV up to $5,000,000 for a vacation home
How to find a jumbo lender?
To find Non-QM lenders, prime lenders for clients with great credit, or hard money lenders to fund your jumbo, visit LenderSearch.com.