Jumbo loan guidelines are beginning to loosen up for borrowers who need loans up to 900,000 in Arizona, California, and Florida. Some lenders are not allowing loans up to 80%. loan to value for purchase and rate and term refinances. Guidelines will continue to be tight to insure borrower’s ability to repay debt and maintain the credit required to support loans of this size. Currently the minimum credit score for a jumbo loan is 720 with a maximum debt to income ratio of 45%. The debt to income ratio is based off gross income, your income prior to taxes or deductions. Prior to the increases, jumbo loans were limited to 75% loan to value for most purchases and rate and term refinances. The current conforming loan limits are $417,000 and loans greater than this figure are considered a Jumbo loan.

With time, lenders will be offering programs to borrowers who are not in the Fannie Mae, Freddie Mac, FHA and VA bucket. The ability to obtain home loan financing may not be as simple as it was during the height of the industry but guidelines will relax.I do not foresee the restoration of Stated Income loans however if they do, this loans will be limited to self employed borrower’s with an abundance of cash reserves. Option Arm loans should not be allowed to return. These loans provided borrower’s the option to pay their loan based on a 30 year term, 15 year term, interest only payment, less than interest payment or a negative amortization payment. The negative arm payment actually added principle to the loan with each payment. Yes, the balance of the loan would increase. Crazy Right??

Today the trend tends to focus on the borrower’s ability to pay their debt and mortgage. After the loan has been issued to the borrower, the lender cannot control the borrower’s financial habits however education has been provided to the borrower’s. Borrowers must be educated and understand that although they may qualify for a home loan does not necessarily mean the borrower’s can afford the payment. Only the borrower knows their budget and whether the monthly payment is within their means.