Low down payment Jumbo home mortgages are making a comeback in Connecticut. You don’t always have to be a cash buyer to become a homeowner in a luxury market. Homebuyers in Samford, Greenwich, New Haven, etc can now finance luxury homes with as little as 5% or 10% down payment.
What is a Jumbo Loan?
Like the name suggests, a jumbo mortgage is a large loan amount. This is a mortgage that exceeds the conforming or conventional loan limits standardized by Fannie Mae & Freddie Mac (the government-sponsored agencies that purchase loans from lenders and banks) In most locations around the U.S, the conforming limit set by Fannie Mae and Freddie Mac is $548,250. However, this limit can be slightly more in select high-cost counties like Fairfield County. Please see the chart below:
What makes a Jumbo loan so good?
Jumbo loans are ideal for home buyers looking for luxury homes. These loans are designed to simplify home buying in pricey markets by covering the full cost of the loan, so there is no need for borrowers to drain their cash reserves. Once borrowers qualify for jumbo loans, there is no need to take out 2 or more loans to purchase. And just like conventional mortgages, jumbo loans can be obtained at a fixed and adjustable-rate 3/1, 5/1, 7/1 or 10/1 term. The interest rates on a jumbo loan are slightly higher due to the incurred risk. However, the rate gap has reduced significantly to spur home sales and economic growth, making jumbo loans extremely affordable for buyers.
Other benefits of jumbo loans include:
- No PMI (Private Mortgage Insurance) requirements
- Both 80/15 combo loans and single 95% LTV jumbo options
- Both fix or adjustable rates options are available
Requirements to qualify for a Jumbo Mortgage:
Below we will take a look at the eligibility and qualification standards for a jumbo loan. To qualify for a jumbo loan, a borrower should expect:
- To make at least 5 percent of the purchase as a down payment. The down payment for this loan is higher typically because there is no PMI requirement
- Minimum 700 credit score to qualify for any jumbo loan programs. 720 credit score may be required for higher loan amounts over $1.5 mil
- Full documentation is required for income and assets
- The maximum debt-to-income ratio should not be more than 38 percent
- Should have at least 6 months’ worth of mortgage payment reserves (after down payment) in the account after closing. Many times retirement account like IRA, 401K can satisfy this request. Lenders like to see borrower’s reserves as it enables them to ensure that the borrower has the ability to make monthly loan payments
Basic loan amount and down payment caps. These programs are available for both purchase and refinance.
- 95% Jumbo Financing – available up to $1,000,000
- 90% Jumbo Financing – available up to $2,000,000
- 85% Jumbo Financing – available up to $2,500,000 (720 credit required)
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