What is a JUMBO loan? In Texas any 1st loan over $510,400 is a jumbo loan.
Has Covid-19 events affected the availability of JUMBO loans? Yes, covid has drastically affected the number of investors willing to do jumbo loan limits. All the wholesale channels have been affected. There are a few lenders offering jumbo loans but the rate his around 1.5% higher and since there are only a few, the time to close a jumbo loan is greatly increased.
Can a 2nd lien be used to avoid the JUMBO loan limit? Yes the 2nd lien can be up to $300,000 and usually has a rate in the 4.5% to 6.5% depending on strength of the borrower and details of the loan. The 2nd lien can be a 10 or 15 year loan or amortized at 30 years but due in 15 years (this last option is a balloon loan).
What credit scores are required for a JUMBO loan? There is a variety of jumbo lenders and they all have different rules. There are very few that will accept credit scores below 700.
Credit score 680-699 0.25% higher rate (max of 80% LTV) LB
Credit score 680-699 0.5% higher rate (max of 75% LTV) LB
One lender requires no mortgage lates in last 24 months.
What is LTV? LTV is the loan to appraised value ratio. For example, if the property appraises for $1M and the loan is $700,000 then the LTV is 70%.
What credit scores are required for better rates on a JUMBO loan? A credit score of 760+ gets you the best rate with a 70% or lower LTV.
Can I get a 90% JUMBO loan? Yes but rates are slightly higher for this loan...
0.50% higher rate for 85.001-90% LTV
0.25% higher rate for 80.001-85% LTV
How much lower is an ARM than a fixed JUMBO loan? There are 3/1 & 5/1 & 7/1 & 10/1 ARMs.
The rate is approximately cheaper by ...
10/1 ARM 0.75%
7/1 ARM 1.1%
5/1 ARM 1.5%
What is special about a JUMBO loan appraisal? When you get into the bigger loan amounts, the appraisal is looked at very closely. If there is any doubt that the property has 20%-30% equity usually the lender is going to require that the appraisal is solid. With loans over $750,000 be prepared to pay for two appraisals. If there is some question if the property will not appraise for the required amount, then we recommend that you let us submit the loan with multiple lenders. This will cost you more in processing and appraisal fees but it will keep the time to closing shorter and it could save you a lot of money in interest.
How long does a Jumbo loan take? The normal time is 3-5 weeks. Some things like a title problem, or a borrower that is slow with delivering needed documents, or a appraisal problem can delay the closing for another 1-4 weeks.
Can I get a JUMBO cashout loan? Yes you can get up to $250,000 cashout, but there are LTV limits, only on single family home, and total loan limits:
65% LTV $1M loan limit
60% LTV $1.5M loan limit
55% LTV $2.0M loan limit
45% LTV $2.5M loan limit
Can I get an non-arm length Jumbo loan? This is really tough as the lenders find it hard to trust the interested parties. At this time we have no lenders willing to do this loan.
Can a first time buyer get a JUMBO loan? Yes but the loan amount is limited to $1M.
What special income rules exist on JUMBO loans? Again various lenders have different rules with jumbo loans.
LU 45% DTI on fixed Jumbo
LU 40% DTI on ARM Jumbo & use 7.0% to calculate
How is the credit score calculated? Each borrower usually has 3 credit scores (from Transunion, Equifax, Experian). Take the middle score from each borrower. Use the middle score from the borrower with the lowest credit score.
Can I average my credit scores from each agency? No underwriters do not allow averaging credit scores.
Can I get a long term lock? You can get a 15, 30, 45, or 60 day lock. Locks can be extended 7, 15, 21 or 30 days.