This $1 mil-lion-plus house is for sale in Spring Branch. JPMorgan Chase is easing the credit scores it requires on jumbo loans of up to $3 million.
The nation's largest bank has made it a little easier for consumers to buy expensive homes - something that Houston has a lot more of these days.
Last week, JPMorgan Chase said it is relaxing the credit scores and down payments it requires on jumbo loans of up to $3 million, giving the bank access to a bigger pool of borrowers amid escalating home prices.
"Historically, people look at the jumbo market as the ultra-wealthy - your top-level doctors, attorneys, etc.," said Jason Pepsnik, the bank's regional manager for mortgage banking in the South. "We're starting to find the general upper-middle class finding the need for that jumbo financing."
The limit for government-backed loans in Texas is $417,000. Borrowing above that figure typically falls into the jumbo-mortgage category.
On a primary home loan, qualified borrowers with Chase can now have a credit score of 680, compared with the 740 score it required previously. Down payments have also been lowered to 15 percent from 20 percent. Requirements on jumbo loans for second home purchases and "cash-out" refinancing have been relaxed, too.
The number of jumbo-loan requests has been rising in Texas as home prices escalate.
Across the Houston area, the median price of a home reached $225,000 this summer, up 5 percent from a year ago and a record high.
More big loans
As a percentage of Chase's overall mortgage originations in the state, jumbo loans jumped to 25 percent from 14 percent last year, Pepsnik said.
The new changes, he said, aren't aimed at borrowers with serious credit trouble, but at those who may have just a dent or two on their credit history.
"It's really important to understand these are still very safe and secure, well documented and thoroughly underwritten loans," Pepsnik said.
Mortgage broker Marcy Wolf of Action Mortgage in Houston said she's seen a much higher demand for jumbo mortgages as Houston's economy boomed in recent years and homes became more expensive.
She's seen other banks loosen their requirements, as well. "A 680 score is still a very decent score and could be just one hiccup from a medical collection," Wolf said.
The same thing that real estate analysts say is propping up the single-family housing market is also helping to boost apartment occupancy: pent-up demand.
In the four years leading up to 2015, Houston-area employers added around 400,000 new jobs, but the supply of apartments didn't keep up, according to multifamily executives from Camden Property Trust.
"Some of the current absorption is undoubtedly coming from this pool of excess demand," Camden's president, Keith Oden, recently said on a conference call to discuss the company's second-quarter performance.
Leaving the suburbs
Another factor driving demand for rentals - specifically some of the pricey new units coming online - is what Camden calls "inversion," or the shift in housing patterns from the suburbs to the urban core.
CEO Ric Campo mentioned a new high-rise apartment building here that's 80 percent leased, and units are renting for an average of $4,500 per month with "zero concessions." The average renter in the building is 55 years old and has an average income of $385,000 per year.
"Those folks are not energy accountants getting laid off," Campo said. "Those folks are people making the decision they want to move in from their house in the suburbs."