Traditionally, local banks and many conservative lenders made it a condition for a 20 percent down payment or even higher in some situations based on the loan amount. In addition, a borrower's credit score and the type of property can greatly influence the lowest down payment one needs to bring in, not withstanding which lender you apply with.
By and large, jumbo loans call for larger down payments (20-30% or more) than conforming loan amounts because the loan amounts are larger $424,100 or more in high cost California counties like San Diego, Orange, Los Angeles, Ventura, San Luis Obispo, and Santa Barbara.
Perhaps, you're seeking a mortgage from $900K -1.5 million with a small down payment. You are in luck. In 2017, with good credit scores above 740, verified employment and income, and low debt to income ratios, you just might be eligible.
Did you know there is a new jumbo mortgage program that only demands a five percent down payment? That's right, a jumbo loan with up to 95% LTV.
It certainly appears like lender's feel more confident that th housing market is strong with offerings like this.
However, unlike the loosy goosy days prior to the housing meltdown, a qualified borrower for this product will really have to be strong financially.
For instance, in spite of only needing to have a five percent down payment, the borrower must have a minimum FICO credit score of 740, have 9 or more months of mortgage payments need to be in a liquid account, no housing delinquencies in the last 4 years, and the borrower's debt-to-income ratio must be no more than 35%. Simply put, you have to be financially strong.
This is only allowed for a purchase or refinance of an existing loan with no cash back. This is in contrast to the housing boom times before 2007 where many people could qualify without traditional income documentation.
The program includes private mortgage insurance that is built into the rate for any loans over 80% loan to value.
In our research, we discovered that this program also differ from a decade ago whereby the lender doesn't allow a first and second mortgage piggyback combo at 95 LTV.
However, there is a 90 LTV jumbo mortgage that does allow a 1st and 2nd combo with a 720 credit score to $1.5 million. 9 months PITI in reserves is needed for this program.
Borrowers have the option to decide on a variety of loan types such as the 5, 7, and 10-year adjustable-rate mortgages, or the 15-year and 30-year fixed mortgages.
Just to be clear, a conventional loan is available with only a 3% down payment, or a FHA loan with 3.5% down in San Diego.
