With the credit crunch that is currently besieging the mortgage industry, many lenders have severely curtailed their offerings of jumbo mortgage loans. Many other lenders have been forced out of business.

One reason is that investors on Wall Street are skittish and there are limited opportunities to sell jumbo loans on the secondary market.

Some lenders, however, are starting to inch out with more jumbo loan programs.

A good example is a previously popular program that was reintroduced by one lender this week.

The guidelines are much tougher now, the appraisal reviews much more stringent, and the interest rates higher than in the past. However, the loan program has become available and many borrowers may benefit from the low payments.

The program is a 5/1 Flexible Payment Option Arm. This is a 30-year loan with the interest rate fixed for the first five years. Then the payment is adjusted annually based on changes in the LIBOR index. The program has three monthly payment options - full amortization over 30 years, interest only payments or a minimum payment that is equal to 50 percent of the fully amortized payment.

When the minimum payment option is selected, the difference between the minimum payment and interest only is added to the loan principal as deferred interest. Minimum payments are available only until such time that the loan balance reaches 115 percent of the original loan amount.

The loan amounts on this program go to $2,000,000 and these loans are only available for primary residences. For purchases and rate and term refinances, the loan to value limit is 95 percent for loans of $500,000, declining to 80 percent for loans of $1 million, 75 percent for loans of $1.5 million and 70 percent for loans of $2 million.

Fully documented income loans are available as well as stated income loans. However, for stated income loans, the loan to value is 10 to 15 percent lower than fully documented income loans because of the higher risk.

Minimum credit scores for full doc loans are 680, while stated income loans require FICO credit scores of 700 - 720 depending on loan size.

Loans under $1 million require six months reserves for principal, interest, taxes and insurance. Higher amounts require 12 months reserves. In addition, the maximum debt-to-income ratio ranges between 40 and 45 percent.

For cash out refinances, the loan to value limits are generally 5 percent less than for purchases or rate and term refinances discussed above. The maximum cash out allowed to a borrower ranges between $250,000 and $400,000 depending on the loan size and the loan to value.

For a borrower who is willing to pay a one-point origination fee, the interest rate is fixed for five years at approximately 7.5 percent, with no prepayment penalty.

It is encouraging to see lenders making more jumbo loan programs available. Even though the program guidelines are very conservative compared to several months ago, the changes are appropriate given the current state of the housing and mortgage markets.

It is anticipated that many jumbo loan borrowers will benefit from the reintroduction of this low minimum payment loan.

If it appeals to you, be sure to review the program in detail with a loan officer who is highly recommended or whom you trust. Also, it is essential that you obtain full disclosure so that you are very clear on how the program works and there are no hidden surprises down the road.