Jumbo mortgages are a type of portfolio loan. Instead of lenders selling these types of loans on Wall Street, they keep them on their books. This way the lender is able to generate interest on their own for their bottom-line.
Since jumbo loans are held in the lender’s portfolio, the guidelines that govern the applications and disbursement of such loans are determined by the lender without too much external influence, for instance from government sponsored entities such as Fannie Mae and Freddie Mac.
The government mandates of an FHA, USDA, or VA loan do not apply.
Portfolio loans are usually lenient and flexible, and are meant to cater to the needs of specific group of borrowers.
Below are different types of portfolio loans.
The Doctor Loan
As you might deduce from the name, this is a Plantation jumbo loan that is designed to cater to doctors. This type of mortgage requires no down payment. Even though, borrowers can make an upfront payment if they wish to it is not required.
Not all types of doctors are eligible for the Doctor Loan Mortgage. To be eligible you have to fall into one of the following categories:
- Medical doctors
Resident and practicing doctors qualify for the doctor mortgage loan as well as any doctors that have a signed letter of employment. Borrowers that are eligible for this loan do not require any mortgage insurance.
Usually, the doctor loan makes 100% financing possible for homes that are up to $750,000. If the doctors want a bigger mortgage, they can make a 10% down payment for up to $2 million.
100% Jumbo Mortgage With No Mortgage Insurance
This is a niche loan product for borrowers that have good credit scores as well as at least 2 months worth of mortgage payments in savings.
With this loan a borrower can get 100% financing for a home that goes for up to $650,000. This only applies for single-family primary residences.
An additional 5% can be borrowed to finance home improvements for a second mortgage. This second mortgage can also be used for completing energy efficiency projects or buying home furniture.
Borrowers must have a 12-month history of rental payments or on-time mortgage.
Jumbo Mortgages for Low Credit Scores
This is a very interesting loan product. As a borrower you can get up to $2 million financing with lackluster credit scores, recent bankruptcy, history of missed payments, foreclosure, short sale etc.
This loan will finance the following types of homes;
- Town homes
- Single-family homes
- 2, 3, and 4 unit properties
The reason why lenders target borrowers with low credit scores is because that niche is underserved.
If a borrower has below average credit scores, they can receive up to $2 million financing with a 10% down payment and no mortgage insurance required.
When a borrower is refinancing they can get up to 90% LTV without any mortgage insurance requirements.
High-Acreage Jumbo Loans
This type of loan is designed to cater for borrowers who are either refinancing or buying homes on up to 40 acres of land. This is of great benefit as conforming loans only offer financing to mortgage borrowers with a maximum of 10 acres.
High-acreage jumbo loans should not be confused with rural loans or agricultural mortgages. Whereas agricultural mortgages are meant to enable borrowers to refinance the cost of operating the farm or purchase farmland, high-acreage jumbo loans allow home buyers to borrow up to 90% of a home’s value without requiring any mortgage insurance be taken.
Also, there are almost no restrictions on occupancy or property type.
Super Jumbo Loans
This is a group of non-conforming loans that allow up to $3 million for single-family, town homes, condos, 2 – 4 unit properties. Using super jumbo loans a borrower can get up to $20 million in financing.
Super jumbo mortgage lenders usually allow down payments that are less than 20%. Another benefit is that mortgage insurance is rarely ever required.
Super jumbo mortgage loans are also used for cash-out refinances and there are few restrictions that limit how much cash a homeowner can get at closing.
Depending on the borrower’s credit score, net worth, and loan size the rates charged on super jumbo loans are lower than the rates charged on jumbo loans.
Cash Out Jumbo Mortgages
These are niche loans for borrowers who want to convert their home equity into cash by using a cash-out refinance.
The maximum amount that homeowners can cash out is $750,000. However, this has to be on a vacation home or a primary home.
This type of loan can be used to purchase additional properties, debt consolidation, access to investment capital. It’s also popular among homeowners who bought their homes in cash terms and who are looking for delayed financing.
If you would like to know more about Plantation jumbo loans get in touch.