Mortgage interest rates have managed to stay low and the high-end housing market has remained steady, with noticeable growth in select locations in California, Florida and North East. The expansion of low down payment programs and increased loan limits this year should help fuel the continued growth. In this 2020 Jumbo home buyers guide we will discuss the latest down payment and loan limits, along with all the important qualifying requirements.
Mortgages are considered “Jumbo” size when they exceed the Conforming loan limit. In most states, the limit is $510,400, with the exception of high-cost counties that go up to $756,700. Higher cost locations would include places like Los Angeles, San Francisco, San Diego (most of California) Seattle, Denver, DC, Boston, NYC to name a few.
Historically Jumbo programs have required a large down payment of 20% or more depending on the bank or lender. However, new programs have emerged that will permit up to 95% financing for those buyers that meet the approval criteria. Just like regular conventional loans, these programs will have minimum requirements that must be met in order for buyers to qualify.
Below we will detail the most popular programs and important requirements, please contact us 7 days a week to learn more. Buyers can call the number above, or just submit the Quick Contact Form on this page (mobile users will find this at the bottom)
2020 Jumbo Loan Home Buyers Guide
Down Payment and Loan Limits:
Some of the most popular Jumbo programs today are those offering low down payments. Even many homebuyers that have sufficient funds for 20% + down payment are looking closer at 10% and 5% options. Why is this? Mainly in part the low interest rates we are witnessing today. Many people see value in retaining more of their savings and reinvesting somewhere else for greater returns. Other examples include:
- First time home buyers just entering the workforce. This can be the case with many new professionals like Doctors and Attorneys that have sufficient income, but lack savings and 20% down payment requirements by most lenders and banks.
- A buyer has a large portion of their equity tied up in their current home listed for sale. Many people have to relocate for their job, etc. The reduced down payment Jumbo can help bridge the gap if their current home is still waiting to be sold.
- Retain cash for needed home improvements. Perhaps your new home will need some extensive renovations or just a few things that need to be freshened up.
Related: It’s always good to consider all the pros and cons as it relates to housing down payments. Forbes also provides some insight into how big of a down payment should you make.
Jumbo financing is available up to 95% for qualified buyers. This option is limited to loan amounts up to $2.0mil. The 90% options are available up to $3.0m. Even though the down payment is less than 20%, the programs do not require the home buyer to pay monthly mortgage insurance or PMI. Buyers can read more about the credit requirements and details on the Jumbo Purchase page. Some of the benefits include:
- Jumbo programs available up to 95% loan to value
- No mortgage insurance
- Not limited to seasoned home buyers, first-time buyers are also welcome to apply.
- Flexible terms to choose from, including all standard fix rate (30 year, 15 year, etc) and adjustable-rate terms.
- Requirements also apply to refinance transactions, please read the Jumbo Refinance page.
Documentation & Paper Work:
Buyers will need to document certain things as it relates to income and assets. For standard employed buyers, a two-year history of tax returns and W2 earning statements will be needed along with two recent pay stubs. Self-employed 1099 borrowers will only provide their complete tax returns.
Additionally, the previous three months of bank statements will be needed. Borrowers should also provide their (1) most recent quarterly 401K or IRA retirement statement.
Keep in mind, lenders will normally only document the financial accounts needed for qualifying. Example: A buyer needs to show $80,000 in total for their down payment, closing costs and payment reserves. The buyer has multiple accounts, but one savings account alone has $150,000. This single account is typically all that is needed to document as it shows more than enough liquid funds to qualify based on the program requirements.
In addition to the items above, borrowers should also have a copy of their ID and/or passport. You should also provide your lender with your Realtor and Home Owners Insurance agent’s contact info as they will need to connect with them during the process.
Jumbo Program Restrictions:
The Jumbo programs do have certain restrictions that we will outline below.
- All 5% down payment options apply strictly to owner-occupied primary properties and select vacation homes. Programs for investment homes are available, but these typically require a minimum of 20% down payment. Building a home on your own land? Please see the special Jumbo Construction requirements.
- All programs are fully documented loans as stated above. Minimum two-year history for self employed borrowers.
- All programs are fully amortized loans with principal and interest.
See the video below to learn more, please connect with us today with questions.