What Are Jumbo Loans
Jumbo Loans are mortgage loans that are higher than $417,000. Jumbo Loans are also called non-conforming loans since they do not conform to Fannie Mae and Freddie Mac conforming lending guidelines. For a mortgage loan to be considered a conforming loan, the mortgage loan needs to conform to the mortgage lending guidelines of Fannie Mae and Freddie Mac. The maximum loan limit for conforming conventional loan programs is $417,000 unless the property is located in a high cost area. For example, many parts of California are in a high cost area so the conforming loan limits in high cost areas are much higher than standard areas. High cost area lending limits is normally $625,500.
What Are The Qualification Requirements For Jumbo Loans
Jumbo Loans are much tougher to qualify than FHA Loans and Conventional Loans. Jumbo Mortgage Lenders take on more risks than traditional conforming mortgage lenders since higher end homes take longer to sell than traditional common homes. Common homes may take a month or two to have it under contract, however, a larger jumbo home may sit on the market for six or more months. Many higher end homes are custom homes and are unique and many qualified high end home buyers may be picky and not like a certain feature on a jumbo home and pass on it. In the event if a jumbo home forecloses, it may take a year or more for the mortgage lender to resell the high end home whereas it may take three months or less to sell a common tract home.
Most Jumbo Mortgage Lenders will require a 700 FICO credit score from the Jumbo Mortgage Loan Borrower. Most Jumbo Mortgage Lenders will not want to see a debt to income ratio of greater than 40% DTI. Jumbo Mortgage Lenders will not want to see any bankruptcies, foreclosures, deed in lieu of foreclosures, and short sales from the Jumbo Mortgage Loan Borrowers in the past 7 years.
Down Payment On Jumbo Loans
Most Jumbo Mortgage Lenders will require 20% down payment on Jumbo Loans. However, there are Jumbo Mortgage Lenders that will qualify a Jumbo Mortgage Loan Borrower with 10% down payment. To qualify for a 10% down payment jumbo mortgage, the jumbo mortgage borrower needs a 740 FICO credit score and should have reserves.
There are also Jumbo Mortgage Lenders that will approve a Jumbo Mortgage Loan Borrower with a 15% down payment or 85% down payment. To qualify for a 15% down payment Jumbo Mortgage Loan, you need a credit score of at least 700 FICO.
Rehabbing High End Home For Resale
If you are a real estate developer rehabbing a high end home, you will need to make sure that the potential home buyer is qualified for a jumbo mortgage loan. Make sure that the potential home buyer has a solid pre-approval letter and I recommend that you even have your attorney and/or realtor contact the loan officer that has issued the pre-approval letter and make sure that the buyer has gone through credit checks, and the financials of the home buyer has been approved.
Lending Network USA
Lending Network USA, www.lendingnetwork.org is a full service residential and commercial mortgage banker and only issues pre-approvals after a licensed loan officer has not just run credit, but has reviewed tax returns, pay check stubs, W-2s, and has gotten a written verification of employment. A pre-approval is not issued until the mortgage loan borrower has an automated approval via the automated underwriting system. All solid pre-approvals with Lending Network USA get closed and not just closed, but closed on time. If you are a real estate developer or home builder who needs a residential mortgage lender to recommend your potential home buyer, please contact Lending Network USA at 262-716-8151 or visit Lending Network USA at www.lendingnetwork.org.