Financing a higher-end home typically means taking a jumbo loan instead of a conforming loan. The New Hampshire Loan Limit issued by Fannie Mae and Freddie Mac is $766,550 in most of the U.S. as of 2024, with some higher-cost counties in CA, NY, etc up to $1,149,825.
Loan amounts above these conventional loan limits are considered “jumbo.” Historically, most lenders processing jumbo loans ask for a down payment of at least 20 percent and even 30 percent for certain programs. When financing a jumbo purchase in New Hampshire, whether the property is located in Manchester, New Haven, or Nashua, there are some very competitive mortgage programs that don’t require such a large down payment.
Consider a home listed at $1,00,000. A 20 percent down payment would then be $200,000. And don’t forget the closing costs and pre-paid escrows for taxes and insurance. $200,000+ is a lot of cash to be pulled out of someone’s portfolio and some buyers prefer to leverage as much as possible instead of tying up the down payment in the property.
Real estate is not the most liquid of assets and the only time you can access that equity is with a higher-rate home equity loan or costly cash-out refinance and subtracting the associated closing costs.
When financing a home with a down payment of less than 20 percent, buyers can employ what is called a “piggyback” loan which is nothing more than a combination of two loans. The primary advantage of this option is the avoidance of mortgage insurance PMI. The first loan is at 80 percent of the sales price and the second loan is at 10 percent. The buyers in this example then put down 10 percent.
Using the same example of a $1,000,000 purchase, the first mortgage would be at 80 percent of that amount, or $800,000, and a second home loan of $100,000. The interest rate on the second mortgage will be slightly higher than the rate on the first loan. However, by keeping the primary first loan below the conforming loan limit, buyers can take advantage of lower conventional interest rates. Lenders commonly refer to this arrangement as an “80-10-10” loan.
The most popular jumbo loan with a low down payment only requires 5% down. This option is great for first-time buyers, or buyers that have sufficient income but lack strong savings. Under this arrangement, the first mortgage remains at 80 percent of the sales price and the second a 15 percent with the remaining amount as the down payment.
Buyers will want to remember a few things regarding all the 90% and 95% Jumbo financing options listed above:
- 95% financing – loan amount limit is $1.5m
- 90% financing – loan amount limit is $3,000,000
- Buyers will need to fully document all income and assets – this is not a “stated” income program. However, self-employed buyers do have select bank statement deposit programs available. This is good for business owners who may have trouble documenting income through traditional tax returns but instead use actual bank deposits to formulate their qualifying income.
- The property must be a primary owner-occupied home or second home. There are other financing options for investment homes, however, these options will require a greater down payment
- Single-family, townhomes, approved condos only. No vacant land, or building on your own land financing permitted.
Buyers can read more Jumbo purchase requirements here.
Again, if you’re considering financing a jumbo purchase, if you don’t want to make a large down payment, you have some very attractive options. Buyers that have questions can reach us at Ph: 800-962-0677 or just submit the Quick Contact Form here for rapid service.
Happy to serve buyers nationwide including NH: Manchester, Nashua, Concord, Dover, Rochester, Keene, Derry, Portsmouth, Laconia, Lebanon, Claremont, Somersworth, Londonderry, Durham, Berlin, Hampton
