How to Get a Jumbo Loan With Only 5% Down-payment – Low Down-payment Jumbo Mortgage
There are many myths out there about needing 20% for a down-payment on a home. The truth is that you do not. Introducing the 5% down Jumbo Mortgage! In the jumbo mortgage world, 5% is a low down-payment Jumbo Loan.
Use the extra funds to remodel the home, save it for a rainy day, payoff other debt (such as high interest credit cards) , or invest it.
There are Jumbo Loan programs available that allow you to put just 5% down-payment up to a $2 million loan amount and 10% down-payment up to $3 million.
Here are some of the basic requirements but please email us at firstname.lastname@example.org or call (925) 322-0436 for questions.
- 740 Mid FICO Score for a 5% Down-payment Jumbo Mortgage
- 660 Mid FICO Score for a 10% Down-payment Jumbo Mortgage
- 100% gifts allowed on 10%+ Down-payment (even reserves)
- 9 months Reserves
- 43% Debt to income ratio for 5% down
- Up to 50% Debt to income ratio with 10% down (55% with exception)
- Available for Primary OR Secondary homes
Unique Features for these Non-QM Low Down-payment Jumbo Mortgages
- No waiting after a Short-Sale, Foreclosure or BK with 15% down-payment
- As little as 10% down-payment just 2 years after a Short-Sale , Foreclosure or Bankruptcy
- 4 years post Short-Sale , Foreclosure or Bankruptcy the Down-payment can be as little as 5%
- RSU income can be used for these Jumbo Mortgages with as little as 5% down-payment
- 100% Gifts are allowed for down-payment, closing costs, AND reserves with as little as 10% down-payment!
- For Self-Employed Borrowers the current year P&L can be averaged with prior years for greater borrowing power
- Non-Occupying Co-borrowers are allowed
- Secondary homes qualify with all of the same parameters
- No Mortgage Insurance payment , ever !
What are the Advantages to Putting Down only 5% on a Jumbo Loan?
There are many advantages to putting down a lower down-payment than 20% on a Jumbo mortgage. The first reason is obvious. If you don’t have enough funds to qualify for a normal 20% down-payment jumbo loan , then you need an alternative. There are several less obvious reasons to put down a smaller amount. The first one is that almost every home needs some upgrading or personalization. Many times new home buyers quickly learn this and realize they have ran out of funds because they used it all for the down-payment. In this case a 5% down-payment Jumbo mortgage saves potentially hundreds of thousands of dollars.
Is it a Good Idea to Put Down 5% Even if I Have 20% Available?
There are many reasons why it is an advantage to put down less than 20% , even if you have it. Placing a 5% down-payment on a property can have huge advantages in other areas.
- Using the money in other investments. The home will appreciate at the same rate no matter if you put down a 90%, 20%, or 5% down-payment.
- Saving the extra funds to renovate or update the home. This can lead to large increases in property value , without extra funds out of pocket. You could always refinance and take advantage of the extra equity after the renovation and updates are finished
- Leaving money for “a rainy day” . Some people will have very little funds available if they put down 20% on a home. That extra 15% saved will leave a nice cushion for a rainy day.
- Using the funds saved to buy an investment property or 2nd home
- Buying down the rate on a low downpayment loan to have the same rate as if you put much more down
What is a Jumbo Mortgage?
Quite simply a jumbo mortgage is a loan that is larger than the county loan limit established by the FHFA. This loan amount is currently $484,350 in most of the US, and $726,525 in high cost areas. Most of the loans under these limits are purchased by Fannie Mae or Freddie Mac on the secondary market. They do not directly make the loans to the public. Above those loan amounts investors purchase the loans. The purchasers can range from big banks to hedge funds or even individual investors in rare occasions. Because of this Jumbo Mortgages have extremely variable guidelines to qualify.
Hopefully through this article we have summed up some of the advantages to using a 5% low downpayment Jumbo loan.
NOTE: Not all applicants will qualify. These Programs may have a higher interest rate, more points or more fees than other Programs requiring documentation. Minimum FICO, reserve, and other requirements apply. Programs may not be available in all states. Contact your Loan Officer for additional program guidelines, restrictions, and eligibility requirements. Rates, points, APRs and programs are subject to change at any time without notice.