February 9th, 2017 1:39 PM by Bob Rutledge
A Jumbo Mortgage is a home loan that exceeds the maximum loan limit of either Fannie Mae or Freddie Mac. In St. Louis and Kansas City MO that maximum loan amount is $424,100.00, so if you have mortgage higher than this number it is considered a Jumbo home loan.
It has been very standard that lenders required a minimum down payment on a Jumbo mortgage of at least 20% of the sale price, over the last year or so that minimum down payment has started to shrink.
If your mortgage amount was close to the conventional loan limits it was possible to do a split loan for many borrowers, to get that borrower a lower down payment. You would have at least a 80% conventional first mortgage and then a 10% second mortgage, which would then require a 10% down payment from the borrower. These split loans are still very popular and I help many Jumbo home buyers with this type of mortgage.
There are advantages to the split loan, lower interest rate, no mortgage insurance, flexible second mortgage options, and of course a 10% down payment instead of the normal 20 percent down payment. The #1 disadvantage is that your sales price cannot drift too far from the conventional loan limit.Of late we have had the opportunity to offer low down payment Jumbo mortgages to home buyers and Jumbo home owners for refinances without having to go the split loan route. We have several 5% down payment mortgage program options available as well as 10% down payment options.Many of these low down payment Jumbo mortgage options will provide a variety of Adjustable Rate Mortgages, 3 year, 5 year, 7 year, and 10 year ARM options, as well as fixed rate options.
Debt ratios are a little more flexible with these newer jumbo programs in that they will allow for a higher debt ratio than the guidelines for a conventional mortgage. To help with those borrowers who have a difficulty with proving income there are a some added nuances to these programs that help provide income to the application. For instance there is the Asset Depletion income addition. On qualified asset accounts, retirement accounts or brokerage accounts for example, we can apply a formula to those assets and apply a specific amount as your income without you ever having to withdraw those funds from the asset account. This can help with debt to income qualification and strengthening a borrowers application.
Many of these new programs are now available not just for primary residences but also for second homes.
You can use these new programs not only for purchases but for rate and term refinances, AND cash out refinances.
If you are considering a low down payment Jumbo mortgage you need to look into some of these new programs that are now available with more coming. I would welcome the opportunity to discuss these programs with you, how they can match your situation, and the best possible options to help.
A low down payment keeps your money working for you at a higher rate of return than most homes in the area in most instances.