Chase Now Requires a 700 FICO and 20% Down to Get a New Mortgage

Last updated on April 17th, 2020

Following in the footsteps of many other mortgage lenders of late, JP Morgan Chase has upped its minimum requirements to get a home loan.

Once again, it has to do with COVID-19, which has led to a flood of unemployment filings and a general fear that many homeowners will begin to default on their mortgages.

This has forced many big banks and mortgage lenders to tighten their belts, focusing on extending new loans to only those they see as the most creditworthy.

In case you missed it, last week Wells Fargo said it now required $250,000 in a Wells bank account to get approved for a jumbo home loan.

Chase’s New Mortgage Guidelines

  • New customers will need to come with at least 20% down when purchasing a home
  • Will also need a minimum FICO score of 700 to get approved
  • Move is designed to limit exposure related to COVID-19 pandemic
  • Also allows Chase to focus on its refinance customers

Beginning this Tuesday, those who apply for a “new mortgage” will be required to make at least a 20% down payment and have a 700+ FICO score, per Reuters.

While it’s somewhat unclear what a “new mortgage” is, the down payment piece points to a home purchase application, as opposed to a mortgage refinance, which comes with a minimum loan-to-value ratio.

The “new” part refers to those who aren’t already Chase customers, such as a home buyer who doesn’t already have a Chase mortgage.

It might also include an existing homeowner with a mortgage owned by a bank other than Chase who is looking to refinance.

Regardless, it’s a pretty aggressive stance and a sign that the mortgage market lacks serious confidence at the moment.

Chase Home Lending’s chief marketing officer Amy Bonitatibus told Reuters it was “due to the economic uncertainty,” and a move that allows the company to serve its existing customers.

She also noted that it’s a temporary change, so the hope is once the dust settles, they’ll go back to more flexible underwriting standards.

New Rules Don’t Apply to Existing Chase Mortgage Customers

  • Only applies to new mortgage applicants at Chase
  • Existing customers can take advantage of old underwriting guidelines
  • Their 3% down home purchase loan known as “DreaMaker” is also unaffected by the changes
  • Move should be temporary but in the meantime simply shop with different lenders

Now some good news regarding the new rules – they don’t apply to existing customers with a mortgage from Chase.

That apparently covers some four million homeowners who can continue to enjoy the usual underwriting guidelines imposed by the bank.

Of course, there’s no need to refinance your mortgage with the bank that owns it.

In fact, it often pays to shop elsewhere and with multiple lenders to ensure you obtain the best deal.

So even if Chase or any other bank isn’t willing to lend, chances are another bank will be more forthcoming.

Lastly, Chase said the move wouldn’t affect its 3% down mortgage known as the “DreaMaker,” which is an agency-backed (Fannie Mae/Freddie Mac) loan program geared toward those with low- or moderate-income.

Aside from requiring just a 3% down payment, applicants need only a 620 FICO score to get approved.

In other words, Chase isn’t leaving the most in need behind, including its own customers and those with limited resources.

Of course, you have to wonder who’s buying a house right now given the complete lack of clarity regarding our collective future.

But it’s nice to know they’re at least leaving options on the table for some.

Chase Stops Accepting HELOC Applications

  • No longer offering home equity lines of credit due to COVID-19
  • Move is temporary but unclear how long home equity lending will be paused
  • Chase has recommended other options such as a cash out refinance
  • Those who already applied will continue to see application processed, current HELOC holders can still draw from their lines

To add insult to injury, Chase has also seized accepting home equity line of credit (HELOC) applications in the face of COVID-19.

The bank posted a message on its website saying, “Due to the economic uncertainty created by COVID-19, we’re temporarily not accepting applications for new home equity lines of credit (HELOC). This will protect both you and the bank.”

You are protected by this move, according to Chase. It’s unclear how you are protected, but rest assured you are protected.

They have recommended other mortgage refinancing options, such as a cash out refinance, assuming you want to access your home’s equity.

The good news is those with existing HELOCs can still tap them. And hopefully they don’t freeze the lines anytime soon.

Lastly, they will “continue to review” requests for those who already applied for a HELOC.

Read more: Why Do Mortgage Companies Want You to Refinance So Badly?

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.


Mortgage hedgers won’t add fuel to rates fire, JPMorgan says

Mortgage hedgers are unlikely to exacerbate the Treasuries sell-off this time around, according to JPMorgan analysts.

Where once Fannie Mae and Freddie Mac held and actively hedged massive mortgage-bond portfolios, the largest players now in the market are those who don’t, such as the Federal Reserve and non-bank servicers.

Mortgage bonds are continuously callable, so when rates increase, a mortgage portfolio’s duration — a measure of its interest-rate sensitivity — can rise dramatically, which necessitates rebalancing. When mortgage investors react to that, the trades they make — such as selling Treasuries — can worsen the very event they are trying to escape, adding impetus to rate sell-offs.

The potential for that kind of hedging could worry any mortgage-bond investor, as the duration of the agency MBS universe is extending after hitting post-2008 lows last year. Meanwhile, the overall weighted-average coupon of mortgages has dropped by 0.3% over the past six months, according to JPMorgan analysts Joshua Younger and Nicholas Maciunas.

But today the mortgage players who most actively hedged — Fannie and Freddie, real estate investment trusts and large bank servicers — have significantly reduced their need to to do so, the analysts added. The government-sponsored enterprises, for example, owned more than 20% of the market in 2003; they hold just 1.5% now.

The JPMorgan Chase & Co. logo. Photographer: ANDREW HARRER


Large banks have moved away from servicing mortgages, with non-banks, which rarely hedge, becoming major players in that space. Bank-serviced loans as a percentage of the universe have dropped to about 16% from 40% back in 2014.

REITs, whose hedging moves in 2013 had an outsized impact because they were caught off-sides, remain a relatively small player and are in a much better position now to handle a rate sell-off, according to the analysts.

U.S. commercial banks, due to the size of their holdings and infrequent rebalancing activity, “are the wildcard,” the JPMorgan analysts added.

It’s not the amount of mortgages so much as who exactly holds those mortgages that matters when trying to determine the level of hedging activity to come. With that in mind, the analysts expect “a fairly benign outlook” overall for mortgage hedging activity, with a repeat of the past unlikely.