Jumbo Adjustable Rate Loans

These loans are amortized over a 30 year period, but the introductory interest rate is fixed for a specified period (indicated in the name – 5/1 ARM has the introductory rate fixed for 5 years) and then it becomes a variable rate depending on the market at that time. Our products include the 5/1, 7/1 and 10/1 Adjustable Rate Mortgages (ARMs).

Loans funded

Loan Amounts

Loan Amounts $510,401 to $2,500,000.

Reliable

Credit Scores

Minimum credit score 700. If there is more than one borrower, we will use the lowest middle score among all borrowers.

Home

Property Types

Single Family Home

Condominium

2 Unit Properties

Why Jumbo ARM?

 

  • These are good to utilize if their rates are lower than Jumbo Fixed. You will need to refinance this loan before it becomes adjustable.
  • Once the introductory interest rate period is over (either 5, 7 or 10 years), this loan will adjust. Let’s go over how that works. You would reference the 10-year libor index and add that number to the margin (2.25). That will create your new interest rate in which the monthly payment will be calculated. You would want to plan on getting out of the loan before that occurs, so you aren’t subject to an unknown adjustment.
  • All of our Jumbo ARM loans have the CAPS (limits on rate changes) 2/2/5. The first CAP (2) indicates how much the interest rate can move in the first adjustment, the subsequent CAP (2) indicates how much the loan can move each adjustment after the first (adjusted monthly thereafter), then the last CAP (5) is the maximum the loan interest rate can increase by.
  • Impounds not required unless your loan to value is above 80%.

 

Qualifications

  • Reserves are one of the main reasons these loans are harder to qualify for. Minimum reserves are calculated by your new monthly principle, interest, taxes, insurance and HOA dues multiplied by nine. Your transaction could require more reserves, depending on the transaction.
  • Qualifying Ratios are tougher on these loans. Maximum qualifying ratio is 43% whereas it can be up to 50% on Conforming & Super Conforming loans (loan size $765,600 &  under, depending on your county).
  • If you are self-employed, we will require the last two years tax returns, plus a YTD profit & loss and balance sheet to qualify your income.
  • For ARMs, you are not qualified on the interest rate you locked, but rather the greater of that rate or the margin (always 2.25) plus the current value of the 12-month libor index for the 7/1 & 10/1 ARMs. Or by the interest rate you locked in at plus 2% for the 5/1 ARM. At times, depending if the market is higher, this can make these loans a bit harder to qualify for.
  • 1st Time Home Buyers are allowed.

 

Concerned you might not fit into the Jumbo restrictions?

If any of the following apply to your transaction, you can always utilize our Jumbo Advantage loan program (contact us for a quote – pricing is not as good as Jumbo Fixed), which does allow for the following:

  • Investment Property Transactions
  • 3-4 Unit Properties
  • Credit score as low as 661
  • Loan to Value up to 90% (no Mortgage Insurance Required)
  • Lower Reserves
  • Non-occupant co-borrower and blended ratios allowed, if you need more income to qualify.

Home Purchase

 

Down Payments

 

Minimum Down Payment requirements will vary depending on several parameters including property type & credit score. Note, the 10/1 ARM parameters are slightly different than what is listed below for the 7/1 & 5/1 ARMs:

  • Primary Residence:
    • Minimum 10.01% for  1 unit, 740 credit score & maximum 800,000 loan size.
    • Minimum 20% for 1 unit, 700 credit score & 1.5 mill loan size.
  • Second Home: minimum 25% down for 1 unit, 740 credit score & maximum 1 mill loan size.

More options become available as down payment increases from the above examples. The credit score can go as low as 700. Loan size can be up to 3 million. For more details on these scenarios, please contact us!

 

Mortgage Insurance (MI)

 

If you are putting down less than 20%, you will have NO PMI on this loan.

Refinance

 

Loan to Value

Minimum Equity required will depending on several parameters including occupancy type (primary or second home), property type, & credit score. Note, 10/1 ARM will have slightly different parameters available.

  • Primary Residence:
    • Minimum 10.01% equity 1 unit, 740 credit score & maximum $800,000 loan size.
    • 20% equity on 1 unit, 700 credit score & maximum 1 mill loan size.
  • Second Home: minimum 25% equity 1 unit, and 740 credit score, maximum loan size 1 million.

There are many different options with more equity and a higher credit score. The credit score can be as low as 700 and  loan size can go up to 3 million. This all specific to your scenario. For more details, please contact us!

 

Mortgage Insurance (MI)

If you have 10.01%-19.99% equity, you will have NO PMI on this loan.

 

Cash-Out

Available on primary residences only. Note, 10/1 ARM will have slightly different parameters available.

The following parameters allow up to $250,000 cash-out:

  • At 35% equity & 740 credit score the max loan size is 1 mill.
  • At 40% equity $ 740 credit score the max loan size is 1.5 mill.

The following parameters allow up to $500,000 cash-out:

  • At 45% equity & 740 credit score the max loan size is 2 mill.
  • At 55% equity $ 740 credit score the max loan size is 2.5 mill.