The real estate blog.

Since it became apparent loan limits would change, the unanswered questions have been, “What will it cost?” and “Are there strings attached?” A day after the new loan limits were announced, the strings were revealed as well.

What:

First of all, these new loans have a name. It’s jumbo conforming. My “mid jumbo” nomenclature didn’t make the cut. Neither did Tanta’s “loans formerly known as jumbo.”

It also appears the product offering is going to be pretty narrow. A 30 year and 15 year fixed will be available April 1st, with 5/1 ARM coming May 1st.

How:

Because of the speed this program has been rolled out, there will be no automatic underwriting. A human being will review every purchase and refinance made under this program.

Loan to values:

Purchase – 90% LTV/CLTV
Refinance – 75% LTV/95% CLTV
ARM Purchase – 80% LTV/CLTV
ARM Refinance- 75% LTV/90% CLTV
Investment Properties – 60% LTV/CLTV

Credit Scores/Debt to Income:

660 minimum
700 above 80% LTV
45% max DTI
Full documentation

Pricing Adjustments:

.75% for credit score less than 680
.25% for high LTV
.55% adverse market area
.25% fixed rate jumbo conforming premium
.75% ARM jumbo conforming premium

Miscellaneous:

On primary residences, the 2nd position loan must be resubordinated. Late mortgage payments will disqualify a borrower. 5% of downpayment must come from purchasers own funds. A full appraisal is required.

Let’s remember these are the parameters for Conforming loans. FHA requirements, particularly for FHASecure, are much more lenient. I’ll discuss those in an upcoming post.