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Debt-To-Income Ratio on Jumbo Loans
What are the maximum debt-to-income ratio requirements to qualify for jumbo loans?
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There are no set maximum front-end and back-end debt-to-income ratio on jumbo loans. Jumbo loans are non-conforming loans and do not have a standard uniform agency guidelines like government and conventional loans. Jumbo loans are portfolio loans and the guidelines are set by each portfolio lender who is originating and funding the jumbo loan. Non-QM wholesale lenders can extend the debt-to-income ratio to a 50% debt-to-income ratio. In this post we will talk about the general guidelines by most traditional and non-QM jumbo lenders when it comes to the maximum debt-to-income ratio. The maximum debt-to-income (DTI) ratio requirements for jumbo loans tend to be stricter than conforming loans, as jumbo loans represent a higher risk for lenders. Here are some typical DTI guidelines for jumbo loan approval:
Front-End DTI Ratio: This measures your monthly housing costs (mortgage payment, taxes, insurance, etc.) against your gross monthly income.
- Maximum front-end DTI is usually capped at around 28-33% for jumbo loans.
Again, the front-end debt-to-income ratio on jumbo loans depends upon the wholesale lender.
Back-End DTI Ratio: This measures your total monthly debt obligations (housing costs plus other debts like credit cards, loans, etc.) against gross monthly income.
- Maximum back-end DTI for jumbo loans is typically around 36-43%.
However, the specific DTI limits can vary by lender and are dependent on factors like:
- Credit score
- Down payment amount
- Loan amount
- Liquid assets/reserves
Borrowers with higher credit scores, larger down payments, more reserves, and lower loan amounts may qualify with slightly higher maximum DTIs in the 38-45% range for back-end ratios.
Some jumbo loan programs allow DTIs to reach 49.99% for very well-qualified borrowers in certain cases.
However, keeping your DTIs under 36% for the back-end ratio generally provides the best chances for jumbo loan approval with most lenders. Low debt ratios are crucial when seeking a larger, non-conforming jumbo mortgage.
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Gustan Cho Associates offers traditional jumbo mortgages with 90% LTV with up to 50% DTI and a 660 FICO at low rates and no PMI