Large Home Loans
Chase Bank is easing the lending requirements for its large home loan programs — jumbo mortgages, which tend to be loans in excess of $417,000 in many markets and $625,500 in more expensive areas.
A potential buyer now only needs a credit score of 680 and a 15% down payment to qualify for a maximum loan amount of $3 million for a primary-residence home. Borrowers used to need a 740 score and put 20% down.
By easing its standards, the bank is hoping to gain more customers. “The performance we had on jumbo loans … has been fantastic. We think we are able to make high-quality loans to high-quality customers,” said Steve Hemperly, head of mortgage origination at JPMorgan Chase & Co.
- The standards for second-home purchases requiring a jumbo loan have also eased to a 680 credit score and a 20% down payment. Buyers used to have to put down 30% to 50%.
- The bank claims it’s the only lender allowing a 680 credit score with smaller down payments for primary and second home jumbo mortgages.
Loose lending practices helped bring down the housing market in 2008. In the wake of the Great Recession, credit markets froze and the mortgage industry upped their loan requirements.
While the standards have started to loosen, mortgage availability remains relatively tight and first-time buyers have been noticeably absent.
However, jumbo loans have performed well in the recovery. Hemperly said there’s been an increase in these large loans in California, the Northeast and Chicago.
Mortgages at a Glance
It is getting easier for some buyers to land a house with less money up front.
More lenders are lowering down-payment requirements, allowing borrowers to commit 3%—or even less—of a home’s purchase price to get a mortgage. Many had been requiring down payments of at least 20% since the recession began.
Some lenders also are waiving mortgage-related fees, and more are allowing down payments to be made by other parties, such as the borrower’s family.
The deals are aimed at buyers with good credit scores and a steady income who have been unable to save enough for a sizable down payment. They are often targeted at buyers who live in expensive housing markets, where even a small down payment can equal tens of thousands of dollars.
The WallStreet Journal & CNNMoney.com August 2015