20% Down Jumbo Loans:

20% down Jumbo loan is now a little easier to obtain.  Over the past five years, it has been extremely difficult to even obtain a Jumbo loan.  It was impossible in the state of Arizona for a long time to even get a 20% down Jumbo loan.  You see the banks were categorizing the entire state of Arizona as a declining market due to our high foreclosure rate.  At one point, the state of Arizona was in the top five for the highest number of foreclosures.  It took us almost four years to get out of the declining market category.

Finally, our housing market is rebounding and things are picking up.  As a result, lenders are now lending money again.  For awhile there, it really didn’t matter.  Even borrowers with high income, low debt to income ratios, fico scores, and lots of assets in the bank were getting declined for Jumbo loans left and right.  It really didn’t make any sense.  Even borrowers who had the cash on hand to purchase the home and pay cash were even being denied.  Tell me if that makes sense?  It does not.

Consequently, at one point, I even called to talk directly to an underwriter and said, “What does it take to even get a loan approved with your company?”  Our clients are meeting all of your expectations, so what’s the problem?  For a long period of time there was nothing but dead silence.  The bottom line was the economy was too bad.  Banks weren’t willing to take a chance and risk having to buy back anymore loans.  Thank goodness all that has finally changed.

As of today, it is now easier to obtain a Jumbo loan.  The lenders are getting back to the basics.  They are no longer asking for everything and anything just to approve your loan.  Rates on the Jumbo loan are extremely attractive.  We offer both the 30 year fixed and arm products.

Advantage of putting 20% down:

Another advantage to put 20% down is if you have an extremely high fico score and you obtain a Fannie Mae loan rather than a Freddie Mac loan you have a better chance of obtaining a property inspection waiver.  This means if the Fannie Mae DU findings say you obtained a property inspection waiver and the lender has no overlays you won’t have to order nor pay for an appraisal.  Instead, you have to pay the current rate which is $75 for the property inspection waiver fee.  This will also speed up your closing process and allow you to close on your new home sooner.

Secondly, fico score requirements on the Jumbo loan products have finally been lowered down to a 680 middle fico score.  The debt to income requirements though are still pretty tight at 41% but if you have strong assets in the bank you maybe able to find a lender who is willing to overlook a higher debt to income ratio for more assets in the bank.

Self employed and write everything off?

Can you  show large deposit consistently going into a bank account?  If yes, then you can qualify for the 24 month bank statement program.  However, this is a Non-Qualified mortgage program.  That means the interest rate is going to be much higher than your traditional Jumbo loan.  However, the rate is still going to be lower than a hard money.

Hard money lenders typically charge four points.  With this lender you will be paying 2 1/4 to maybe 2 1/2 points depending upon your fico score and whether or not you this is an investment property or a cash out loan.  You will also need to supply a current balance sheet and profit and loss statement.  The lender will need a copy of your business license and they have to be able to verify your business phone number through google or lender 411 look up tool.  Since guidelines change frequently, please call our office for more information.  If you are self-employed and had a previous bankruptcy, short sale, or foreclosure and don’t want to wait the required timeframe to qualify for a loan, we do have a hard money lender that will help you out.

Currently asset depletion is not allowed on Jumbo loans?  What is an asset depletion?  This means borrowers are withdrawing money each money out of an account typically investment accounts and using this money for their monthly living expenses.  If you are of retirement age and have a monthly 401k monthly distribution plan set up to receive income, then lenders will count that income as long as you can provide a letter stating the income will continue for at least the next 3 years.  You also have to provide proof that you have received a monthly distribution check.



Article updated on 8/19/15

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