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 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 Jumbo 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 locations around the U.S. like Texas, Illinois, Arizona, etc the 2021 conforming limit imposed by Fannie Mae and Freddie Mac is $548,250. This limit increases up to $822,375 for designated high-cost locations in California, Utah, Colorado, DC, NYC, Florida, etc.
Jumbo Loan Advantage:
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 drain 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 a jumbo loan are slightly higher due to the added lender/bank risk. However, the interest rate gap has been decreasing as the housing market continues to stabilize and available liquidity returns.
- No PMI (Monthly Mortgage Insurance) requirements
- Both 80/15 combo loans and single 95% LTV jumbo loan offered – along with an array of 90%, 10% down payment options
- Fix or adjustable rates
Loan Approval Requirements for a Jumbo Mortgage Loan:
Below we will review the loan approval requirements for a jumbo loan. To qualify for a jumbo loan, a borrower should expect:
- Minimum 5 percent down payment. The down payment for this loan is higher typically because there is no PMI requirement
- 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 documentation required for income and assets ( tax returns and W2’s for regularly employed borrowers)
- The maximum debt ratio should not be more than 45 percent
- Homebuyers need to have at least 3-9 months’ worth of mortgage payment reserves (after down payment) in a documented account after closing. Oftentimes 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. The exact amount can vary depending on the loan amount, borrower’s credit profile, etc.
Basic loan amount and down payment caps. These programs are available for both Jumbo purchase and refinance.
- 95% Jumbo Financing – 5% down available up to $1,500,000 (700 credit required
- 90% Jumbo Financing – 10% down available up to $2,450,000 (720 credit required)
- 85% Jumbo Financing – 15% down available up to $2,950,000 (720 credit required)
Buyers that have questions about qualifying can fast-track their request (7 days a week) by submitting the Quick Contact form on this page.