Jumbo Mortgages & DSCR Loans, Multi-Million Dollar Mortgages EXPLAINED

Troy Millings (0:00)

Jumbo mortgages, what's that? Huh, I love it. So jumbo mortgages, right? So typically when we're looking at jumbo mortgages, these are loan amounts above what Fannie Mae, Freddie Mac will purchase from a lender, right? So, and loan limits are about to go up anyway.

There's a couple lenders that's already, you know, increased their loan limits for 2025 So, you know, a single family in 2025, Fannie Mae will go up to $802,000. It's not official yet, but several lenders have already put it out there because we anticipate that they will in November raise the loan limits again. So, any loan amount that is, that exceeds the threshold that Fannie Mae and Freddie Mac will buy, right?

And so, these loans are typically portfolio loans because the government is not backing them. So, the lender is lending pretty much their own money on this one. So, the requirements to get qualified for this jumbo mortgage is going to be a lot tougher, especially if you're going full documentation. Full documentation, ladies and gentlemen, is when you're providing your W-tools, pay stubs, bank statements, tax returns. That's a full documentation loan. So, your debt to income ratio will have to be 43% or below, and some jumbo lenders want to see 40% or below. And you can get loan amounts up to 3 million, 4 million, 5 million just depending on that lender.

So, this is when you're trying to buy that mega mansion, that big old dream house of yours, you're going to use a jumbo mortgage. Now, if you are self-employed and you're looking to buy your mega mansion or your dream home that maybe cost you $2 million, $2.5 million, and you don't file your taxes properly and you write off everything, no worry. There are loans out there that can help you without providing all this information like bank statement loans, where we're using the deposits that you're receiving in your business bank statements over a 12-month period. And the lender will average that out and determine how much income that you're bringing in based off of those deposits. And we can use that to qualify you. This loan is extremely popular amongst entrepreneurs who take full advantage of the tax code. This is going to come at a much higher interest rate than what a paper full documentation jumbo loan is going to get. But it's well worth it to pay that 2% margin higher, 2.5% margin higher in rate than paying probably a couple of hundred thousand in taxes, right? So again, that's when you need to mortgage plan if you are self-employed and you're looking to buy this luxury home. You need to have a mortgage plan in place so you know, you can weigh out all the pros and cons ahead of time. But there are definitely options out there for all buyers in this jumbo market, whether you're full documentation, whether you're going non-traditional, and you want to get that luxurious dream home of yours.

Rashad Bilal (3:25)

So just really quick on the jumbo loan, it's usually a higher interest rate. Prime example, if the interest rates are seven, you could typically see it at nine to 10%.

Troy Millings (3:35)

So if you're doing a full documentation loan, and let's just say you're going to a retail bank like we just mentioned. Honestly, the retail banks is going to give you the best deal. Like a mortgage company, a mortgage broker cannot compete with a retail bank like a JPMorgan, because they know you got money. So if you go over there and you bring over 250,000, 300,000 deposit that, they're going to give you a great deal. So their rates right now might be in the fives for a $2 million loan on a 30-year fix right now because they're making their own rules, so to speak. It's their portfolio money.

Now, if you are a non-traditional buyer, then that rate today might be somewhere around 7.5% to 8% on this type of paper. If you're doing non-traditional financing like bank statement loans, light dock loans, P&L loans, things of that nature where you're not showing traditional documentation, you're going to pay a premium for it, right? But you're going to get into the house. And that's most important for these self-employed borrowers because they can afford that payment if they're buying at that level. They're not really too concerned about that payment shot because they'd rather have a payment that's $500 or $1,000 higher, so that way, they don't have to pay $100,000, $200,000 in taxes. So it balances itself out. So the interest rate is important, but it's not as equally as important in looking at the full spectrum from a holistic point of view of where you stand.