New Jumbo financing options have emerged for 2018. Qualified borrowers in Dallas, Houston, Austin and San Antonio now have newly expanded low down payment Jumbo mortgage options. In fact, some of these new options permit up to 95% making it possible to obtain financing without 20% down.
A mortgage is considered “jumbo” when the final loan exceeds $484,350 – this is current conforming loan limit throughout the entire state Texas. In years past, many borrowers were offered nearly no limited down payment flexibility when it came to Texas jumbo loans. Many banks, credit unions and lenders would require 20% down just to be approved. Today we will discuss the latest Jumbo financing updates and things homebuyers will need know before applying.
Just like conventional loans, jumbo loans have set requirements regarding down payment, credit score, debt to income limits and documentation. All the requirements listed below apply to strictly to owner-occupied, full-time primary residences.
Reduced Down Payment Options:
10% Down Payment
- Loan limit – the current loan amount limit for this program is $3,000,000
- Credit – Credit score requirements change based on loan amount. Borrowers will need a 660 credit score when the loan amount is below 1 mil. Over 1 mil will require a 680 score. Over 2mil will require a 720 score.
- Loan Structure – Depending on the property state, borrowers will have a few options available regarding the loan structure. Single loan or 1st and 2nd mortgage combo options (80-10-10) which are a popular way to reduce interest rates. Both options eliminate the need for monthly mortgage insurance. All options have fix rate and common adjustable rate terms available – fully amortized principal and interest.
- Payment Reserves – all jumbo loans will require payment reserves. This is the amount of liquid and non-liquid funds available after down payment and closing costs. The amount will be based on credit, loan amount and down payment amount. However, 6 months of payment reserves is generally a min requirement. For higher loan amounts exceeding $2m, this requirement can increase to 12 months +
5% Down Payment
- Loan limit – the current Jumbo loan limit for this program is $2,000,000
- Credit – Credit score requirement is currently 700.
- Loan Structure – Depending on the property state, borrowers will have a few options available regarding the loan structure. Single loan or 1st and 2nd mortgage combo options (80-15-5) which are a popular way to reduce interest rates. Both options eliminate the need for monthly mortgage insurance. All options have fix rate and common adjustable rate terms available – fully amortized principal and interest.
- Payment Reserves – 3-9 months depending on the variables mentioned above.
Important Qualifying Notes:
- Eligible properties include 1 unit single family homes, condominiums and townhomes. Vacant land, ranches, farms or any large acreage where the land value exceeds 30% of the total value is not permitted. Building a home on your own lot is also not permitted. This does not include homes being sold directly by new home builders – spec homes for example.
- All properties must be a primary residence or second home for the max financing. Investment properties are permitted, but limited to 80% loan to value for loan amounts below $1.5mil. Higher loan amounts will require 25%-30% min down payment.
- All programs require full documentation of buyers income and assets. Tax returns, W2’s (if regularly employed) banking and asset statements. Self-employed borrowers require a min (2) years of tax returns.
- All standards listed above also apply to Jumbo refinance – rate/term reduction programs. Homeowners searching for a cash out refinance can do so with eligible equity. However, these programs will be more limited on max loan to value, generally 90% limit.
- Eligible military Veteran? You may also have special VA high balance options available. Read more about VA Jumbo mortgages here.
Homebuyers that want to learn more about any of the programs above and contact Five Stars at ph: 800-871-2636 or visit www.FiveStarsMortgage.com