How to get a jumbo mortgage with a 10% low down payment in Maryland, DC, or Virginia
Likely if you're reading this you are frustrated that there seems to be no way to obtain a mortgage above the Fannie loan limits, normally requiring a jumbo loan. Alternative (non-conventional) loan products are loans required for loans above $729,750 for the DC metro area (including Northern Virginia, Arlington, Fairfax, Loudoun, Alexandria, Falls Church, Manassas, Montgomery County, Frederick County, Prince Georges County, and the District of Columbia). Similarly, in the Baltimore metro area the limit is $560,000 (including Howard County, Anne Arundel County, Baltimore County, Baltimore City).
This has major impact for buyers in areas like Clarksville MD, Ellioctt City MD, and Annapolis MD where home prices easily reach the $700,000+ mark, but the County limit is only $560,000. Similarly, in Bethesda or Chevy Chase MD with $729,750 as a loan limit not having 20% down becomes a problem with homes priced above $810,000.
You can find the full list of county loan limits here, if you happen to be purchasing a home above these limits and don't have enough of a down payment to reach the limit you would normally be required to obtain a jumbo mortgage. Jumbo mortgages require a minimum of 20% and in some cases require 30%+ down. So, if you want to buy your $700,000+ home in Clarksville, MD with less than 20% down you used to be out of luck.
First Place Bank has created a product to solve this problem! My bank can provide financing with a minimum of 10% down above the county loan limit, this involves our second trust or 80/10/10 product. The basic concept is we setup a first mortgage up to the county loan limit, and piggyback our second trust 80/10/10 up to $350,000+, with a minimum of 10% down. Below are a few scenarios:
Clarksville, MD Mortgage Option, Sales Price $850,000, 10% down:
- Down payment (10%): $85,000
- First Mortgage: $560,000
- Second Mortgage: $205,000
- Combined loan amount: $765,000
Annapolis, MD Mortgage Option, Sales Price $900,000, 10% down:
- Down payment (10%): $90,000
- First Mortgage: $560,000
- Second Mortgage: $250,000
- Combined loan amount: $810,000
Bethesda / Chevy Chase, MD Mortgage Option, Sales Price $1,000,000, 10% down:
- Down payment (10%): $100,000
- First Mortgage: $729,750
- Second Mortgage: $170,250
- Combined loan amount: $900,000
As always, our second trusts come with no pre-payment penalty and no mortgage insurance so you can feel free to pay this off at anytime. Often my clients go non-contingent on the purchase of their next home and simply payoff the second trust with proceeds from the sale of their current home, only carrying the second mortgage for 1-2 months. If you have any questions about my bank's 80/10/10 second mortgage product, please don't hesitate to contact me via email or phone 301-585-7283.
**If you aren't above the loan limits and only have 10% down, see my past blog on how our 80/10/10 loan can save you money over a loan with mortgage insurance / PMI.