Low down payment Jumbo loans have been making a comeback in recent months. Many home buyers are unaware they can obtain Jumbo financing without a 20% down payment. Approved home buyers now have high balance mortgage options up to 95% loan to value. Single stand-alone 95% loans, and also 80-15 “piggyback” combo mortgages.
These programs are available to homebuyers across the nation, however, the exact loan requirements can vary slightly from state to state. The 5% down options not only apply to Jumbo purchase transactions but also to refinance loans. Below we will detail all the important loan application requirements home buyers will want to know. If you have questions, please contact us 7 days a week at Ph: 800-962-0677 or just fill out the Quick Contact form located on this page.
A jumbo home mortgage is a loan that exceeds the conforming (conventional) loan limits standardized by Fannie Mae & Freddie Mac (the government-sponsored agencies that purchase loans from lenders and banks) In most U.S. locations like Texas, Illinois, Arizona, etc the 2022 conforming limit imposed by Fannie Mae and Freddie Mac is $647,200. This limit increases up to $970,800 for designated high-cost locations within California, Hawaii, Colorado, NYC, Florida, etc.
New for 2022: Be sure to read about the new 3.5% down Jumbo program here.
5% Down Jumbo Loan Benefits:
Jumbo loans are ideal for home buyers looking for higher priced 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 deplete their cash reserves. Similar to conventional mortgages, jumbo loans can be obtained at a 30, 15 fix rate or adjustable rate term of 3/1, 5/1, 7/1 or 10/1 ARM.
The interest rates on higher loan-to-value jumbo programs are slightly increased due to the additional risk incurred by the lender or bank. However, the interest rate gap between Jumbo and Conventional mortgages has been decreasing more as the secondary market continues to expand with greater liquidity.
- No PMI (Monthly Mortgage Insurance) requirements
- Both 80-15 combo loans and a single 95% LTV jumbo loan are offered – along with an array of 90%, 80-10 options
- Fix or adjustable rates are available with no “early payoff” or prepayment penalties.
Approval Requirements 5% Down Jumbo Mortgage:
Below we will review the loan approval requirements for a jumbo loan. To qualify, a borrower should expect:
- Minimum 5 percent down payment
- Minimum 680 credit score to qualify for any jumbo loan programs. 720 credit score may be required for higher loan amounts that exceed $2 mil
- Full income documentation is required for income and assets ( tax returns and/or W2’s for regularly employed borrowers)
- The maximum borrower debt ratio should not be more than 45 percent
- Homebuyers should have at least 3-6 months’ worth of mortgage payment reserves (after down payment) in a documented account after closing. Oftentimes non-liquid investment retirement accounts like IRA and 401K do satisfy this requirement. Lenders like to see borrowers’ reserves as it enables them to ensure that the borrower has the ability to make monthly loan payments. The exact amount can vary depending on the loan amount, borrower’s credit profile, among other factors. Higher loan amounts exceeding $2mil will generally require greater reserves.
- Eligible properties include single-family homes, townhomes, select condos used as primary residences. Vacant land, farms, and investment properties are not eligible.
Jumbo Down Payment & Loan Limit Caps:
These programs are available for both Jumbo purchase and rate reduction refinance.
- 96.5% Jumbo Financing – 3.5% down available up to $1,500,000. (740 credit & 24 months reserves required)
- 95% Jumbo Financing – 5% down available up to $2,000,000 depending on location. (700 credit required)
- 90% Jumbo Financing – 10% down available up to $2,500,000 (700 credit required)
- 85% Jumbo Financing – 15% down available up to $3,500,000 (720 credit required)
Buyers that want to learn more about qualifying can fast-track their request (7 days a week) by submitting the Quick Contact form on this page.