Jumbo Loans After Bankruptcy
In this mortgage guide, we will cover qualifying for jumbo loans after bankruptcy. We all know that despite our best intentions, we can have instances that happen in life that cause financial hardship. We get in over our heads in debt or a major event has occurred that has made it impossible to dig ourselves out of a hole. We have filed for bankruptcy and now are living in a post-bankruptcy world where we believe we will not qualify for a mortgage loan for 7-10 years. This does not have to be your reality!
This article will cover and discuss how to qualify for Jumbo Loans after Bankruptcy. There are various government, conventional, and non-QM Jumbo Loans after bankruptcy mortgage loan options for homebuyers and homeowners needing to refinance. Depending on the mortgage lender, there are waiting period requirements in qualifying for jumbo loans after Bankruptcy.
What Are Jumbo Loans?
A Jumbo loan, a portfolio loan, is also considered a non-conforming loan. There are two types of Jumbo Loans. Traditional jumbo loans and non-QM jumbo loans. A popular non-QM jumbo loan are non-QM Jumbo Loans After Bankruptcy with no waiting period requirements.
Jumbo loans do not fit into the limits set by the Federal Housing Finance Agency, FHFA. Fannie Mae or Freddie Mac will not purchase these loans if it does not fit into these guidelines. These entities are created by the U.S. Congress and are government-sponsored agencies that basically buy mortgage loans from lenders. Their purpose is to provide stability to the mortgage market. Because of this, they have guidelines to ensure loans conform to the rules they set.
Conforming Versus Jumbo Loans
Most of the United States has a conforming loan limit of $647,200. Jumbo loan limits are up to the individual portfolio mortgage lenders. Non-QM Mortgage Lenders have wholesale mortgage lenders who will allow jumbo loans up to $10 Million. Now, you might think $650,000 will not buy much in your area.
High-Cost Counties
If you live in an area with higher-cost properties and a higher cost of living, this loan limit will do nothing for you! Conforming loan limits do vary by location. The conforming loan limit will vary from county to county. If you wish to purchase a home above the conforming loan limits, this is where jumbo loans come in. Certain areas throughout the United States are high-cost areas.
High-Balance Jumbo Loans in High-Cost Counties
Areas classified as high-cost areas are eligible for FHA, and Conforming Jumbo Loans. VA loans do not have a maximum VA loan limit. However, any VA loan higher than the conforming loan limit is still classified as a VA Jumbo loan. The maximum loan limit for high-cost counties for $2022 is $970,800 for single-family homes. Because typical jumbo loan lenders are taking a significant risk with the loan size being outside the conforming limits, they will look at your financial situation very thoroughly.
Benefits of Jumbo Loans
If you’re considering a jumbo loan, here are the benefits of jumbo loans you should know before applying for a loan. Even if the loan limit is enough in your area for a lovely home, perhaps you want a luxury home. If you’re looking to buy a high-end property, a jumbo loan can help you finance the purchase. You can avoid private mortgage insurance (PMI). Jumbo loans typically don’t require PMI! You may qualify for a lower interest rate.
Negatives of Jumbo Mortgages
Here are Jumbo mortgage loans cons
- You may need a credit score of 700 FICO or higher to qualify for traditional jumbo loans.
- You may need a down payment of 20% or more on traditional jumbo loans.
- You may face stricter underwriting standards.
- Jumbo loans are considered riskier than conforming loans.
- You’ll need to meet more stringent underwriting standards to qualify.
- These are often manually underwritten.
Can You Get Jumbo Loans After Bankruptcy?
YES! Non-QM Mortgages are for both owner-occupied homes and also for investment properties that do not fit into the government and conventional mortgage loan guidelines. What kind of property can you purchase with a jumbo loan? There are no restrictions on what type of property a person can buy with jumbo Non-QM loans. A borrower can use a jumbo loan to purchase primary homes, luxury homes, vacation homes, multi-unit properties, and investment properties.
Non-QM Jumbo Loans After Bankruptcy With No Waiting Period
Non-QM Loans do not have waiting periods after bankruptcy, unlike traditional loans. For example, an FHA loan would require a waiting period of two years before even applying for a mortgage. With Non-QM Jumbo loans after bankruptcy, there is no waiting period and there are no maximum loan amounts. Even borrowers with delinquent payments in the past year can still qualify! Self-employed borrowers can qualify with credit scores as low as 500. A Bank Statement mortgage for a self-employed individual does not require income tax returns. Instead, an average monthly deposit is used to average income.
Non-QM Jumbo Loans After Bankruptcy Vs. Traditional Jumbo Loans
A traditional Jumbo Loan would require a minimum credit score and have a standard waiting period of 7 years after Bankruptcy. With a traditional Jumbo loan, depending on your credit score, you may have a higher interest rate and required down payment. A non-QM Jumbo loan is not held to the exact strict requirements as a traditional jumbo loan, which is why, even after Bankruptcy and foreclosures, you can still buy a home.
Reserves on Non-QM Jumbo Loans After Bankruptcy
Some Jumbo loans require up to 18 months of cash reserves. This is because Fannie Mae and Freddie Mac cannot purchase the loans, so lenders are free to add whatever Jumbo Guidelines they want, and they are sometimes strict as they want that safety net. This makes it clear that most of us could not qualify for a Jumbo loan if that were the requirements, as not many have up to 18 months of mortgage payments saved up!
Non-QM Jumbo Loans After Bankruptcy With Bad Credit
How to qualify for a jumbo mortgage with less than perfect credit? We have a wide selection of jumbo mortgage products available for our clients. Many of them are not as strict as your standard jumbo mortgage. Below are some of the programs outlined for individuals with credit or Bankruptcy issues.
Extended Non-QM Jumbo Loans After Bankruptcy
Some lenders will accept a credit score of 680 FICO. These loans are still very tough to qualify for and will require a 20% down payment (sometimes more) with credit scores below 720 FICO. Please keep in mind this mortgage product does follow the standard jumbo guideline criteria and will require 12 months of liquid cash reserves after the high down payment. Still a rare jumbo product because it allows a lower credit score option.
NON-QM Jumbo Loans After Bankruptcy Guidelines
Over the past few years, we have seen a resurgence of NON-QM mortgage lending. NON-QM stands for a “non-qualified” mortgage. In layman’s terms, these mortgage products do not follow Fannie Mae or Freddie Mac guidelines. The investor will have their own guidelines for each mortgage product. This opens up jumbo mortgage financing to credit scores down to 580.
Why Do Homebuyers Use Non-QM Loans?
Why do borrowers use Non-QM Jumbo Loans After Bankruptcy? They might have late mortgage payment history, derogatory credit events, a recent short sale, or a recent bankruptcy or foreclosure. Non-QM Jumbo loans also have lower cash reserves required, sometimes as low as three months, often getting this waived. Once you have decided to move forward in purchasing a new property, you can find a mortgage lender that will work for you and offer the right products to get you approved, even after bankruptcy.