While lots of lenders have recently cut back on offerings that aren’t backed explicitly by the government, some are rolling out new loan programs to help homeowners get the financing they need.
We’ve already seen non-QM lending basically dry up as the COVID-19 pandemic hit, though some lenders in the space are still hanging on with reduced menus.
And I’ve reported that numerous large, depository banks have also eliminated their higher-risk programs, including Chase upping credit score requirements and no longer offering HELOCS.
Similarly, Wells Fargo tightened its mortgage guidelines and even implemented a rule requiring $250,000 in one of their bank accounts in order to get a jumbo loan.
Clearly that won’t work for a lot of folks, so if you’re in need of a jumbo home loan, it might be a lot harder than it used to be.
Sprout Mortgage Launches Premier Jumbo Program
- Loan amounts as high as $3 million for purchase or refinance
- Up to 90% loan-to-value (LTV) with a 700 FICO score and no PMI
- Up to 43% DTI ratio (40% DTI for LTV>85%)
- 1-4 unit primary, second homes, and investment properties (condos included)
One mortgage lender has just launched a new proprietary jumbo loan program that allows loan amounts up to $3 million on a 30-year fixed, which is available to approved mortgage brokers and correspondents.
Sprout Mortgage based in East Meadow, New York unveiled its so-called “Premier Jumbo” today to meet the demand of home buyers and homeowners left behind by larger banks and lenders.
They will allow borrowers to secure jumbo loan financing with a FICO score as low as 660, with loan-to-value (LTV) ratios as high as 80% and loan amounts up to $1 million.
Those with credit scores of 700 or higher will be able to take out $1 million loan amounts as high as 90% LTV.
And if you’ve got a 740 or higher credit score, it’s possible to get a $3 million mortgage up to 70% LTV.
Note that the max debt-to-income ratio (DTI) is 43%, or 40% for LTVs above 85%.
You also need to have cash on hand, with minimum asset reserves varying from six months to 12 months depending on the loan attributes, though gift funds are acceptable.
Sprout also allows one 30-day mortgage late in the past 24 months, but you must have been current over the past six months.
They don’t allow foreclosure, bankruptcy, or deed-in-lieu of foreclosure in the past seven years, or short sale, pre-foreclosure, or loan modification in the past four years.
Yes, You Can Get Cash Out with That Too
- Many lenders have stopped offering cash out refinances in light of COVID-19
- Too risky to offer them since Fannie and Freddie won’t buy them if in forbearance
- Sprout allows cash out up to 80% LTV with $1 million loan amounts
- Only need a 680 credit score to qualify and investment properties are also in play
It’s also possible to get a cash out refinance via the new loan program, another area lenders have been shying away from due to widespread mortgage forbearance.
In short, Fannie Mae and Freddie Mac aren’t buying cash out refis if they go into forbearance, so it’s riskier to originate such loans right now.
But Sprout is happy to offer cash out refis, even allowing $1 million loan amounts up to 80% LTV on primary residences with a 680 minimum credit score.
If you own an investment property, you can also get cash out up to 60% LTV on loan amounts as high as $1.5 million with a 700 FICO score.
Now the big question is how good are their mortgage rates? It’s great that they offer such flexible financing terms, but you’ve got to see how competitive they are, assuming other lenders can match their programs.
As always, be sure to take the time to shop around if you need a jumbo loan – yes, it’ll be harder to do so, but right now pricing can really vary from shop to shop.