How to Qualify for a Luxury Jumbo Loan
Look no further! We will show you exactly how to qualify for a Jumbo loan, what you need throughout the process, and what price point you will be eligible for!
90% Max LTV | As Low as 10% Down!
If you are a real estate investor, self-employed, or full document qualifier, we have many different loan options that will fit all your needs.
We can provide jumbo loan financing for primary residence, second homes or investment properties and will provide the very best options that fit your circumstances.
The time is now to trust Valor Lending Group with your dreams of the future, so don’t wait.
Get started TODAY! Call David Christie
What you will learn:
- What a Jumbo Loan is
- How to qualify for a Jumbo Loan
- Why to use a Jumbo Loan
- What a Jumbo Loan looks like
- Self-employed requirements
- Employed requirements
- Qualifying hourly employee income
- Qualifying salary employee income
- Income, debts and credits
- Down payment, rates and costs
- Owner Occupied vs. Non Owner Occupied
- Owner Occupied
- Non Owner Occupied
- Jumbo Bank Statement Loans
- Jumbo Loans 2-4 Units
- VA Jumbo Loans
- Valor Jumbo Loan Highlights
What is a Jumbo Mortgage Loan?
A Jumbo Loan is one that exceeds the county guidelines for conforming and high balance conforming loan limits set by Fannie Mae and Freddie Mac. (Arizona county limits here) (California county limits here)
Valor Lending Group has a number of full document financing solutions for purchase, refinance, and cash out Jumbo Loans, we have options that allow you to secure and maintain the luxury property of your dreams.
Why Use Jumbo Mortgage Loans?
Traditional mortgage lenders require tax returns, W-2s, and paycheck stubs in order to determine monthly income. For salaried and hourly borrowers, the lenders look at gross income for qualifying purposes. But for self-employed borrowers, traditional mortgage lenders look at net income, the adjusted gross income showing on tax returns. The qualifying income is viewed in conjunction with all debts, and a debt-to-income (“DTI”) ratio is calculated. Traditional mortgage lenders would be required to have a DTI of no more that 35%, however, at Valor Lending Group our funding sources typically allow up to 50% DTI and a lower credit score and down payment requirement.
How Do You Qualify For A Jumbo Loan?
You qualify for a Jumbo Loan in the same way as a conventional or high balance loan, with full documentation, such as 2 years tax returns, W2s, most recent pay stubs, etc.
What Does a Jumbo Loan Look Like?
1) Self-Employed Requirement
Jumbo lenders typically require a borrower to be self-employed for at least two years. This is verified through appropriate professional licenses, business licenses, or sometimes a letter from a tax preparer. Additionally, two years of business income tax returns are required for business owners to verify no decline in business income year over year. Jumbo lenders may also consider the W2 earnings of a spouse or co-borrower regarding qualifying income.
2) Employment Requirement
Once again, jumbo lenders review two years of consecutive tax returns, W2s, 1099’s, and pay stubs to determine qualifying income. Additional types of income include social security, pensions, monthly retirement distributions, annuities, etc. Jumbo lenders will obtain your most recent 30-day paystubs and a certified employment offer letter stating the gross salary, start date, and benefits (for those starting a new job in the same industry).
(a) Qualifying Hourly employee income
For hourly W2 employees, the lender will use your hourly pay rate, averaged with your most recent two years’ tax return income. Additionally, the lender will qualify for a two-year average of your commission, bonus, vacation pay, sick pay, etc. (if applicable).
(b) Qualifying Salary employee income
The lender will always count 100% of your current salary and does not use a two-year average, as your pay is guaranteed year to year per your employment contract. To the contrary, the lender will qualify a two-year average of your commission, bonus, vacation pay, sick pay, etc. (if applicable).
3) Income, Debts & Credit
After determining the total qualifying income, the next step is to total all debts, including the new mortgage payment, property tax, insurance, and homeowner’s association (HOA). All monthly obligations are viewed in conjunction with total monthly qualifying income, and most lenders will allow up to 35% debt-to-income (“DTI”) ratio when qualifying borrowers for a Jumbo loan. However, Valor Lending Group has funding sources allowing up to 50% DTI on a jumbo loan. Most jumbo lenders require a minimum 700 credit score, although each has its guidelines. Credit requirements for jumbo loans are more stringent than traditional lenders.
4) Down Payment, Rates & Costs
The minimum down payment on a jumbo loan is usually 20%. While a handful of Lenders may allow as low as a 10% down payment, a 10% down is becoming increasingly rare. These loans will have noticeably higher interest rates due to a higher default risk factor, the need for investors to buy 10% down jumbo mortgage-backed securities on the secondary market.
The 10% down jumbos will also require higher credit scores, liquid reserves (12 Months), and a lower debt-to-income ratio (DTI). Larger down payments, say 20% or higher, often allow for a better rate and term. Gift funds from close relatives are usually allowed to be applied toward the down payment. Although, many jumbo lenders may not allow gift funds for liquid reserves. Rates for jumbo loans are generally higher than traditional conforming loans (based on increased perceived risk to jumbo lenders). Still, all other typical loan fees are similar, such as origination points, broker and lender fees, appraisals, title and escrow, etc.
5) Owner Occupied vs. Non-Owner Occupied
(a) Owner Occupied
Owner-occupied jumbo loans, including second homes, offer higher leverage of up to 90% loan-to-value (LTV), lower interest rates, and lower credit score requirements. This loan can be either, vested in your personal name or family revocable trust.
(b) Non-Owner Occupied
Non-owner-occupied jumbo loans will require a minimum of 20% down, higher interest rates, and higher credit score requirements. This loan can be either, vested in your personal name or family trust or awarded in an LLC or corporation, etc.
6) Jumbo Bank Statement Loans
It is possible to get a “jumbo bank statement loan.” These are simply bank statement loans above a specific dollar amount, higher or lower depending on the county. Depending on the jumbo loan lender, bank statement loans can go up to $10 million.
7) Jumbo Loans 2-4 Units
Jumbo loans are also used for 1–4-unit residential properties. Depending on the number of units, jumbo loans for 2-4 units allow for higher loan limits. As you increase the number of units, you will see a decrease in the loan to value. The highest loan to value rate is offered on a 1-unit property (SFR, Condo, or Townhome).
VA Jumbo Loans
VA Loans offer financing up to 100% of a property’s value and feature fixed and adjustable-rate loans. And there is NO down payment up to $1,500,000.00!
Valor Lending Group has VA Jumbo Loans for veterans, active-duty members, and their families. Qualifications for VA Jumbo Loans differ from those of a typical VA loan.
To qualify for VA jumbo loans, you must have a 640 or higher FICO score.
- With a FICO score of 640, you must come with 10% down (with loans exceeding 1.5M).
- And if you do not want to come with a down payment you will have to have a FICO score of a 740 or higher.
*This information and requirements may vary depending on lender policies
Recap of our Loan Products
- Hard Money Loans (35% down / minimal documentation) Typically Funded in 7-10 days.
- Stated Income Loans (Great for business owners and self-employed) No tax returns!
- 100% financing is available (we can cross-collateralize other properties if there is enough equity)
- Valor VA Home Loan 100% financing up to $1.5MM
- Rental Property Loan – No tax returns or DTI calculation! Based on the subject property’s cash flow – No DSCR Coverage is needed!
- Flipper & Rehab Loans (Flip a property with one of our many options)
- 2nd Position Loans up to $5mm
- Raw Land & Lot Loans
- Ground-up Construction for spec homes, custom homes, and commercial ground-up.
- Farms, Vineyards, Ranches, and Agricultural Properties (25-30% down)
- 10% down Jumbos, WITH NO MI up to $2MM /10% Down up to $3MM
- Manufactured Housing / Mobile Homes (20% down / 600+ credit score)
- Acreage Properties
- Commercial Loans up to $500mm
- 3% & 5% down Conventional Loans– LPMI (Lender paid mortgage insurance)
- Foreign Nationals Loans (no social security or residency required)
Other Programs we Offer:
- Conventional Conforming Loans
- High Balance Conforming
- FHA, USDA
- Reverse mortgages up to $1 Million in Value
- Cash-Out Refinancing
*Terms and conditions can change daily without notice
We look forward to the opportunity to serve you!
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