Purchasing a higher-end home in Dallas typically means taking a jumbo loan instead of a standard conforming. In this post we will discuss the updated Jumbo home purchase programs in Dallas and things buyers should know. In Texas, the current conforming loan limits by Fannie Mae and Freddie Mac is $484,350 and will likely remain the same into 2020. Mortgage amounts above this limit are considered “jumbo.”
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 thats 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 for the difference. The advantage to this is buyers can often financing higher loan to values (up to 90% and even 95% in some cases) 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 home 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” loan.
Qualified buyers seeking loans below $1,500,000 may have additional options that require only a 5% down payment. Under this arrangement, the first mortgage remains at 80 percent of the sales price and the second a 15 percent with the remaining amount the down payment. Using the same example as above, the first mortgage would be at $760,000 and the second at 5.0 percent of the sales price, or just $47,500.
Buyers will want to remember a few things in regards to all the 90% and 95% Jumbo financing options: Please see the complete list of Jumbo Purchase Requirements here.
- 95% financing – loan amount limit is $1,500,000 -$2,000,000 depending on borrower qualifications.
- 90% financing – loan amount limit is $3,000,000
- Buyers will need to fully document all income and assets – this is not a “no” income verification program
- 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.
- Property must be a primary owner-occupied home. There are other options for vacation homes, however, these options will require greater down payment
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