Many active home buyers are probably aware that mortgage options, especially Jumbo loans, have become more restrictive in recent months. Lenders continue to adjust mortgage program guidelines in response to the economic impacts of COVID-19.
High balance Jumbo mortgages have probably been restricted the most during this time. In fact, some banks have abandoned high-cost loans altogether for the foreseeable future.
The good news is there are still reduced down payment options available to Santa Barbara home buyers with less than 20% down payment. It’s important first to note that the highest loan to value programs (95% and 90%) are still available to qualified borrowers.
Loan Amount Limits More Restrictive:
The major change in recent months has been to the loan amount limits. Some of the 5% down programs were recently available up to $2mil, 10% down payment programs were even higher. However, due to new restrictions, these programs are now reduced to $850,000 -$1,250,000 depending on location.
The base conforming loan limits in California can range from $548,250, all the way up to $822,375 for a 1 unit primary residence. Santa Barbara County sits right in the middle at $660,100. Some lenders are still offering first and second mortgage combo mortgages to well-qualified buyers in California.
Typically the first (primary) mortgage amount will be limited to whatever the max conforming loan limit is for the county. Then a second mortgage can oftentimes be added to “fill the gap” up to 90% or 95% depending on the scenario.
Select Refinance Programs Still Available:
Interest rate reduction and cash-out refinance programs remain for homeowners with low loan to values below 80%. Mortgage rates are currently at all-time low levels, however, the difference in Conforming loan rates and Jumbo rates have increased slightly since the beginning of the year as noted by CNBC.
Buyers should also note that ALL programs will require full documentation, qualifying debt to income and outstanding credit to be eligible. Cash reserve requirements may also be increased during this time of adjustment. Mortgage program requirements have become more restrictive since COVID-19 and we expect this trend to continue into 2021. To get the most up to date requirements, we encourage home buyers to call or submit the Quick Contact Form on this page.