As lenders try to capture more of the high-end housing market, J.P. Morgan Chase announced that it’s loosening the underwriting standards for issuing jumbo mortgages. Jumbo mortgages exceed $417,000 in most parts of the country, or $625,500 in pricier areas. The bank is lowering its minimum credit score and down payment requirements for mortgages up to $3 million.
Chase’s decision follows similar steps from Bank of America Corp., Wells Fargo and other banks for jumbo mortgage requirements.
As such, the jumbo market is getting bigger. Jumbo originations in the most recent quarter climbed to an eight-year high of $93 billion — a 58 percent increase from a year ago, according to Inside Mortgage Finance estimates. Jumbo mortgages issued by lenders last year accounted for about 20 percent of all first-lien mortgages, up from 5.5 percent in 2009.
“There’s no question that the jumbo market has probably recovered more than any sector of the mortgage market since the housing crisis,” says Guy Cecala, publisher of Inside Mortgage Finance.
J.P. Morgan is lowering its minimum FICO credit scores for jumbo mortgages from 740 to 680 for loans on primary single-family purchases, second homes and some refinances. The bank is also allowing a 15 percent down payment for loans up to $3 million. That is less than other banks, such as Bank of America and PNC Financial Services Group Inc., which allow a 15 percent down payment for jumbo loans up to $1 million and $1.5 million, respectively.