Jumbo loan guidelines have continued to relax in recent years. Rhode Island’s housing market overall has been on a steady rebound since the financial crisis back in 2008. Until recently, the minimum down payment for jumbo mortgages was typically 15-20% with most lenders and banks.
Gradually, some more aggressive mortgage companies offered programs with only 10% down. Now in 2023 and we are beginning to see jumbo loan options that require only a low 5% down payment. Below we will discuss the mortgage application guidelines borrowers will need to know before starting.
To begin let’s look at what actually defines a “jumbo loan” A Rhode Island jumbo loan is a mortgage that exceeds conforming loan limits set by Fannie Mae and Freddie Mac. All counties in RI have a set conforming loan limit of $726,200 for single one-unit homes in 2023. To clarify, the final loan amount is the subject, not the sales price or appraised value of the home.
For example, if you put a $200,000 down payment on a home selling for $800,000, your actual loan would be $600,000. Since this amount is less than the conforming loan maximum of $726,200 – a standard conventional loan would be the best option.
Now let’s discuss the requirements to obtain jumbo loan approval. Regardless of down payment, or LTV, buyers should be prepared to have the following: Home buyers that have questions can contact us at the number above. We serve all of RI including Providence, Warwick, Cranston.
- Applicant’s credit scores need to be 700 or above to be eligible for 95% Jumbo financing option. Applicants with lower credit scores down to 660 can be approved up to 90% financing. No serious financial hardship in the previous 5 years – short sale, foreclosure, bankruptcy, etc.
- Self-employed buyers are required to demonstrate a minimum of two years in business. W2 workers just need a two-year history, but are not required to be with the same employer. Any large gaps in employment history (6 months+) should be expanded.
- Buyers need to be prepared to document their financial status. This means a full two years of employment earning documentation, tax returns, etc. In addition, assets and banking information will be required to document down payment, closing costs and reserves.
Latest Jumbo program guidelines: Please note, the guidelines below apply only to buyers purchasing owner-occupied or second homes. These loan to value requirements do not apply to investor home purchases. Such buyers do have financing options with a greater down payment. Please see more information about Jumbo loan down payment here.
- 95% financing – available to eligible buyers up to $2,000,000 loan amount. 700 credit score needed.
- 90% financing – available to eligible buyers up to $3,000,000 loan amount. The exact minimum credit score required will depend on the actual loan amount. Generally, 640 credit for loan amounts under $750,000 and 680 credit for loan amounts greater.
- 85% financing – available to qualified buyers over $3,500,000 loan amount. These programs require a minimum 680 credit score, and generally 12 months of reveres after down payment and closing costs. Contact us below for more details.
- Loan Structure: Depending on the property state – most programs offer a 1st and 2nd mortgage “piggyback” loan structure, or a single loan option. Both with ZERO private mortgage insurance.
- Payment Terms: All programs have 30 or 15-year fix rate options, along with adjustable rate (ARM) options -5/1, 7/1, 10/1.
- Simple refinance options up 95 percent (no cash out) are available. This is great for homeowners that want to consolidate their 1st and 2nd mortgage, reduce their interest rate, or switch from an ARM to fix rate loan.
- Cash out refinance options available up to 90% LTV.
Call us with questions anytime, happy to serve: Providence, Warwick, Cranston, Pawtucket, East Providence, Woonsocket, Newport, Central Falls, Westerly, Valley Falls, Newport East, Wakefield-Peacedale, Greenville, Cumberland Hill, Tiverton, Kingston, Pascoag, Narragansett Pier, Harrisville, Hope Valley, Melville, Chepachet, Ashaway, Bradford RI.