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 submit the Quick Contact Form 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 2024 conforming limit imposed by Fannie Mae and Freddie Mac is $766,550. This limit increases up to $1,149,825 for designated high-cost locations within California, Hawaii, Colorado, NYC, Florida, etc.
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.
The low down payment options are also helpful for many borrowers that may be relocating, but waiting for their current home to sell. In cases like this, the buyer may have a significant portion of their equity tied up in their current residence. Taking out a 5% down payment jumbo loan can help bridge the gap while they wait to sell their current home.
We also offer options for borrowers looking to reduce or eliminate costly PMI (private mortgage insurance) that would otherwise be required with traditional loans. Similar to conventional mortgages, jumbo loans can be obtained at a 30, 15 fix rate or adjustable rate terms 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 $1.5 mil
- Full income documentation is required for income and assets (tax returns and/or W2s for regularly employed borrowers) * Special self-employed bank statement options are available.
- The maximum borrower-debt ratio should not be more than 45 percent
- Homebuyers should have at least 3-4 months’ worth of mortgage payment reserves (after their 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, and the borrower’s credit profile, among other factors. Higher loan amounts exceeding $2.5m will generally require greater reserves.
- Eligible properties include single-family homes, townhomes, and select condos used as primary residences.
- New construction-to-permanent financing available with a slightly greater down payment
- 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.
- 95% Jumbo Financing – 5% down available up to $2,000,000 *depending on location. (680 credit required)
- 90% Jumbo Financing – 10% down available up to $3,000,000 (700 credit required)
- 85% Jumbo Financing – 15% down available up to $3,500,000 (720 credit required)
Buyers who want to learn more about qualifying can call us 7 days a week, or fast-track their request by submitting the Quick Contact Form on this page.