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HELOCs Fading; Jumbo Rates Way Higher; FAQs

Orange town home with blue shutters purchased using a Jumbo loan. Jumbo rates are currently up due to the COVID-19 crisis

Two of the nation’s largest banks announced that they will no longer originate new Home Equity Lines of Credit (HELOCs).

This is of course in response to the COVID-19 crisis.

We still offer HELOCs but only to 90% Combined Loan to Value (95% CLTV no longer exists) and only for purchase money financing.

In Texas, HELOC options have always been limited but we still have 2nd mortgage/lien options up to 95% (for small loan amounts).

Note that 2nd mortgages differ from HELOCs in that they are issued in lump sums at close; borrowers cannot redraw against them after they pay them down; and the rates are usually fixed (while HELOCs are variable, tied to Prime Rate).


The interest rates associated with jumbo loans shot way up today.

This is b/c the biggest player in the jumbo market right now (Chase) significantly increased its rates.

Jumbo rates are well over 1% higher today than where they were yesterday.


Below are some answers to questions we’ve been receiving from agents lately:

  1. What Documents Do WE Need to Pre-Approve a Buyer?
    • Completed loan application and auth to run credit
    • Most recent month of paystubs
    • Most recent two years of Taxes (only if Jumbo, self-employed or using rental income)
    • Most recent two months of bank statements
    • Property docs for any homes owned (Mortgage, insurance, HOA)
    • Will not hold up a pre-approval for these items, but we also ask for:
      • W2s
      • Driver’s License
  2. What is the lowest credit score for A-paper?
    • Fannie/Freddie – 620
    • FHA – 640 with strict overlays
  3. How much do credit scores affect a borrower’s interest rate?
    • For conforming loans, every 20 points reduction in a credit score pushes up the rate by about 1/8% in most cases.
  4. What is the max for income to debt ratio?
    • Fannie- 49/49% (with lower down payment and weaker credit – closer to 45%)
    • Freddie – 45% in most cases, with some exceptions up to 49%
    • FHA – 45/55%
    • VA – 55% ish – technically no DTI cap as long as they satisfy residual income guides (we had a recent approval with ratios in the mid 60’s)
    • Jumbo – Mainly 43% but limitations abound
  5. What are our current closing periods (time from contract to close)?
    • We still need 30 days for every type of loan b/c of the COVID-19 crisis

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167