Your Credit May Be Good, But Is It Jumbo Good?

“I have an 800 FICO so I know I’ll qualify…”

We, here at Guaranteed Rate, pride ourselves on being a great jumbo mortgage lender. And because of my geography and clientele in the San Francisco Bay Area, we encounter a lot of higher loan amounts. Our rates are very competitive and we have many investors who can cover the needs of just about every jumbo loan scenario that can realistically be done these days. Moreover, we retain control of the underwriting, so we can exercise “makes sense” judgment and get files approved where many other banks and brokers cannot.

Yet, we are not immune to the quirks of the current state of jumbo mortgage lending and credit tradeline requirements definitely fall into the “quirk” category. A theme that will emerge here, and true to our opening statement, is that FICO score alone does not a jumbo approval make. As we’ll see, the credit requirements for jumbo loans reach beyond a borrower’s score and delve deeper into the components that comprise those very numbers, namely:

  1. Credit history — depth and age of tradelines.
  2. Blend of credit — distribution of open credit between mortgage, installment and revolving debt.
  3. Use of credit itself — how recently have accounts been used?

If you are in the market for a jumbo mortgage, it’s important to work with a mortgage professional early, as some of these requirements simply cannot be met in the time period it would take to close a traditional escrow. Let’s look at one jumbo investor’s credit profile requirements:

  • Minimum of 3 open tradelines with minimum of 12 month history for EACH borrower.
  • Authorized user accounts cannot be used to meet minimum tradeline requirement.
  • Credit depth must be a minimum of 2 years.
  • All 3 tradelines must have had current activity.

Or another’s:

  • Minimum 3 tradelines open and active for at least 24 months.
  • At least one of the three tradelines must be a mortgage or installment loan.
  • Remaining tradelines must be rated for 12 months.

So, a moral of this story might be that you may indeed have a very good FICO score. But if you do not demonstrate to a jumbo mortgage investor that you can produce a high score by way of the behavior that they believe will most likely lead to repayment of their loan, you may find yourself on the outside looking in. Remember, if you don’t like to use credit — if you pay cash for that auto, if you eschew credit cards — this can be highly effective financial behavior from a personal standpoint, but it can leave the mortgage lender in the dark about whether you’ve got the right credit curriculum vitae.

 

If you have questions about a jumbo home loan and/or about how your credit report and profile will be viewed by a jumbo lender, get in touch today. I can help you make sense of what it takes to qualify for a jumbo mortgage, and in many cases, we can find just the right investor to work with your existing credit profile. Your credit may already be excellent but we’ll make sure it’s jumbo good.

 

Rob Spinosa
Senior Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960
Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

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