Financing a higher end home typically means taking a jumbo loan instead of a conforming. Current conforming loan limits issued by Fannie Mae and Freddie Mac are currently $484,350 in Texas and should remain the same through 2020. Loan amounts above this limit in Bexar County are considered high balance or “Jumbo.” Historically, most jumbo lenders ask for a 15 percent down payment and even 20%+ for higher loan amounts. When financing a jumbo purchase in San Antonio, there are some very competitive mortgage programs that don’t require such a large down payment.
Consider a home listed at $715,000. A 20 percent down payment would then be $143,000. Also, don’t forget the closing costs and tax impounds as well, which are typically another 3%. $143,000 is a lot of cash to be invested and some buyers prefer to leverage as much as possible instead of tying up the down payment on the property. Real estate is not the most liquid of assets and the only time you can access that equity is with a higher-rate home equity loan or simply selling the property and subtracting the associated closing costs.
When financing a home with a down payment of less than 20 percent, buyers today have different options. Take a “piggyback” loan, which is nothing more than a combination of two loans. The first loan is at 80 percent of the sales price and the second loan at 10 percent. The buyers in this example then put down 10 percent. Using the same example of a $715,000 purchase, the first mortgage would be at 80 percent of that amount, or $572,000 and a second home loan of $71,500. The interest rate on the second mortgage will be slightly higher than the rate on the first loan. Lenders commonly refer to this arrangement as an “80-10-10” combo mortgage. Buyers can often opt for one single loan. There are advantages and disadvantages with each depending on the loan amount, and buyers credit profile.
Another jumbo loan with a low down payment only asks for 5% down. Under this arrangement, the first mortgage remains at 80 percent of the sales price and the second a 15 percent with the remaining amount the down payment. Under the 80-15-5 financing option, the interest rates will be slightly higher compared to the 80-10-10 program due to greater lender risk.
Buyers will want to remember a few things in regards to all the 90% and 95% Jumbo financing options:
- 95% financing - loan amount limit is $2,000,000
- 90% financing - loan amount limit is $3,000,000
- Buyers will need to fully document all income and assets (like normal Conventional mortgages)
- The property must be an owner-occupied home. However, there are other options for vacation homes, but these programs will require a greater down payment.
- Regular single-family homes, townhomes, and condos only. No lot loans, acreage or build on your own land financing permitted.
Buyers can learn more about all the 2020 Jumbo purchase and refinance requirements at https://www.jumboloancenter.com/purchase
We are proud to assist buyers across TX and nationwide.
Eligible Texas Veterans should also learn more about special VA Jumbo Loan programs.
Comments(0)