In many parts of Florida, obtaining a jumbo loan is a little easier as home values in certain pockets are much higher compared to other parts of the country. Currently, the conforming loan limit, those issued using guidelines established by Fannie Mae and Freddie Mac is $424,100 except a few counties in South Fla. Anything above that means a jumbo loan, often with slightly more restrictive approval guidelines. There are fewer jumbo lenders compared to lenders who offer conventional or government-backed loans. Jumbo guidelines can often require greater down payment and higher credit scores compared to other mortgage options like FHA, Conventional, etc.
Most jumbo loan parameters ask for at least a 20 percent down payment and the interest rates on fixed rate programs may be a little higher than a conforming loan amount. Many jumbo lenders also offer a variety of hybrid loans where the interest rate is fixed for an initial period, say three or five years, and then turning into a loan that can adjust annually. But it’s the 20 percent down payment that is often the biggest hurdle. Real estate is not the most liquid of assets so when a down payment is made, it’s difficult to recover without selling the property or obtaining a home equity loan. Sometimes jumbo buyers have more than enough for a down payment and closing costs but would rather have their money working elsewhere instead of being locked up in real estate. For either those who are saving for a 20 percent down payment or simply want to put down as little as possible, there is a special loan program that requires just a 10 percent down payment. The added bonus is there is no private mortgage insurance needed.
For conventional loans, either conforming or jumbo, traditionally when the first mortgage is over 80 percent of the sales price, an additional private mortgage insurance premium must be purchased to protect the lender from the amount the buyers put down and 20 percent of the sales price. Yet here in Florida, there is an attractive option.
There are two programs that will finance up to 90 percent of the sales price of a home. The first jumbo loan program with no PMI needs only a 10 percent down payment and finances the remaining 90 percent with one mortgage. For example, a home has a list price of $2M. The sellers accept the full price offer and the buyers make a 10 percent down payment of $200,000, borrowing $1.8M and there is no additional private mortgage insurance premium whatsoever.
In addition, this program is a bit easier to qualify for as it relates to credit scores. Many jumbo loan programs ask for at least a credit score of 700 while this loan only asks for a 680 score. There is a maximum loan amount of $2.5M with a $2.78M sales price. The loan program does ask for a fully documented loan with tax returns, bank statements and such but these are common requirements for most any jumbo loan. This 90 percent, no PMI loan is reserved to finance an owner-occupied property and cannot be used to finance a vacation or second home or a rental property. The program also asks for a minimum of six months’ of reserves.
Another alternative with 10 percent down jumbo purchase without PMI is a combination of a first and a second mortgage, commonly referred to as an 80-10-10 loan with the first mortgage at 80 percent of the sales price and a second lien at 10 percent. Keeping the first mortgage at 80 percent means there is no PMI requirement for the jumbo purchase. If you thought getting a jumbo loan meant making a large down payment, that’s simply not the case. There are options that are worthy of your consideration.
Learn more about the latest 2016 Jumbo guidelines here.
Buyers in high costs locations of Orlando, Tampa, Miami -Dade, Sarasota, West Palm Beach, and Naples will especially find some of these options useful. Please learn more at http://jumbomortgagesource.com/jumbo-purchase/ or call us 7 days a week at ph: 800-962-0677
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