Real estate trends in Dallas have been positive in recent years, and are forecasted to continue the upswing in the foreseeable future. The median home value in Dallas and Fort Worth area currently sits around $307,000, down slightly from last year according to Zillow. Buyers in the price range usually opt for standard conforming or FHA loans.
However, Dallas also has an expanding luxury housing market with multi-million dollar homes in neighborhoods like Highland Park, Westover Hills, Bluffview, and University Park.
Buyers financing these higher-end homes must typically apply for a jumbo loan instead of a standard-conforming mortgage. In this post, we will discuss the updated Jumbo home purchase programs in Dallas and the things buyers should know.
In Texas, the current 2024 conforming loan limit set by Fannie Mae and Freddie Mac is $766,550. Any mortgage amounts above this limit would be considered “Jumbo.”
Dallas Jumbo Loan Down Payment:
Historically, most jumbo loans ask for a minimum down payment of at least 20 percent and even higher for certain programs. When financing a jumbo purchase in the Dallas-Fort Worth area, there are some very competitive mortgage programs that don’t require such a large down payment.
Consider a $950,000 home that’s for sale, a 20 percent down payment would be $190,000. The buyer will also have closing costs and pre-paid escrow costs on top of this. $190,000 is a lot of cash to be pulled out of someone’s savings and some borrowers prefer to leverage as much as possible instead of tying up the down payment in the property. Or a buyer could have all their equity tied up in their current home that may be listed for sale, but not sold yet.
When financing a home with a down payment of less than 20 percent, buyers can often use what is called a “piggyback” combo loan which is nothing more than a combination of two loans. The first loan is at 80 percent of the sales price and the second loan is for the difference. The advantage to this is buyers can often finance higher loan to values (up to 95%) and can still avoid monthly PMI costs.
The buyers in the example above decided to put down 10 percent. Using the same example of a $950,000 purchase, the first mortgage would be at 80 percent of that amount, or $760,000, and a second loan of $95,000. The other 10% or $95,000 would be the buyer’s down payment. Lenders commonly refer to this arrangement as an “80-10-10” combo arrangement.
The primary advantage of the combo loan option above is keeping the first mortgage below the conforming loan limit, this allows the borrower to take advantage of the lower conventional interest rates. In addition, this allows the borrower to avoid paying monthly mortgage insurance as mentioned above.
Note: Qualified buyers can also do an 80/15/5 piggy-back loan arrangement up to 95% financing. Contact us today to learn about all the options and what loan structure works best for you.
Buyers will want to remember a few things in regard to all the 90% and 95% Jumbo financing options: Please see the complete list of Jumbo Purchase Requirements in the link above.
- 95% financing – loan amount limit is $1,500,000 depending on borrower qualifications.
- 90% financing – loan amount limit is $2,500,000
- Buyers will need to fully document all income and assets just the same as regular conventional programs. This is not a stated income or “no” income verification program. However, self-employed home buyers do have exclusive bank statement deposit qualifying programs available to them.
- Single-family, townhomes, approved condos only. No vacant land. Want to build on your own lot? Please read about special Jumbo Loans For New Construction.
- The property must be a primary owner-occupied home. There are other options for vacation homes, with a greater down payment
Searching for refinancing information? Please read more about Dallas Jumbo refinancing here.
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