In the days before the Housing crisis lenders competed for Jumbo loan mortgages. Buyers were able to make documented loans by simply blowing on mirrors. The underwriter would see their breath had fogged the mirror and say they were approved. I had a client would was an Elvis impersonator. He said that he made a minimum of $500 a night and worked a minimum of 200 nights a year. His income tax did not agree with his bank account. No problem, the loan was approved for the full amount. Fast forward to today a prominent Houston doctor who has retired with Millions in the bank is turned down for a jumbo loan. The reason his tax returns do not show enough income to justify the loan. Since he has most of his money in investments and only takes out the money he needs to live on.
Qualifying for a Jumbo
- Guaranteed income that continues for 3 years
- Money in bank does not help
- Money in the bank can be put in a 5 year annuity, to use it for qualifying
- Full documentation on everyone
- Loans up to $2 million require 20% down
- 6 to 12 months reserves in bank
- If rental property income is used, 6 to 12 months in reserve for this income also
- Credit score of 720 to 740 minimum
- Debt to Income ratio of less than 38%
Good News involving Jumbos
- Lenders are allowing up to 6% in seller contribution to buyers closing csots
- There are more outlets form Jumbo loans today
- Fixed rate Jumbo Loans are available
- Can do a no credit qualifying
- Income is separated out, so if one source declines you only get credit that decline
- There are 90/10 loans out there. The problem is finding a second lender and if you do the interest rate will be very high
Many Jumbo originate from large banks who will be keeping their loans and selling them on the open market. The Banks are encouraging people to buy Jumbo loans with adjustable rates. So that they will be protected in case interest rates rise and they have to pay higher rates on bank deposits. Lenders are not giving up money on yield spreads with Jumbo Loans. The best deal a buyer can get is ½ point on the loan origination fee.
Call Bill Edge at 713-240-2949 to see Houston homes in 24 hours or less