With the median home value in Savannah approximately $143,000 and a median household income of $37,000, homes are very affordable in this south Georgia. Yet despite this relatively low median home value, the luxury home market remains robust. There are many homes listed for sale that fall into the jumbo category in pockets in and around Savannah. For reference, Chatham County FHA mortgage limits are currently set at $275,665. The current conventional loan limit for Savannah is $424,100. Any loan amount greater than this is considered a jumbo mortgage and these programs have different qualifying guidelines buyers should know.
One of the requirements for jumbo loans is typically a higher down payment. Current conforming loans ask for at least a 5% down payment while most jumbo mortgage programs ask for a down payment of at least 20% - depending on the bank or lender. Let’s look at a home listed in Savannah for $1 million. With a down payment of 20%, that means a minimum down payment of $200,000.
However, unlike government-backed and conventional loans underwritten to Fannie Mae and Freddie Mac guidelines, jumbo loan programs requirements have relaxed a bit in recent years. While many jumbo lenders do ask for at least 20% down, there are other mortgage programs that require much less. There are jumbo loan programs to finance approved homes in Savannah that ask for just 10 and even 5% down. Using that same $1 mil example, 10% down is $100,000 and a 5% down amount is $50,000. Closing costs and pre paid insurance /taxes are generally 2-3 additional percent.
While real estate is indeed an asset whose value will increase over time it’s also one of the least "liquid" With a stock or a mutual fund, it’s easy to liquidate and pull cash out of the stock or mutual fund. With real estate, while you can also access your equity by selling, it’s a much more expensive and lengthy process. That’s why some home buyers prefer to keep their cash and put as little down as possible while still obtaining competitive financing.
Such financing is available in what some refer to as a “piggyback” loan where there are two mortgages to finance a single transaction. There are two jumbo piggyback loan programs, an 80-15-5 (for 95% financing) and 80-10-10 ( for 90% financing) The “80” refers to the first mortgage loan at 80% of the sales price of the home. Lenders often try to keep the first loan at or below the conforming loan limit when possible. Then add the 2nd mortgage to cover the difference minus required down payment.
In the past, jumbo interest rates were slightly higher than those for conforming loan amounts. That still holds true today, but they are much closer than they used to be. Final down payment, credit score, and overall risk will greatly determine rates.
Home buyers can learn about all the 95% and 90% Jumbo home purchase requirements here. Here you can learn about all the down payment requirements, credit score, and loan amount limits.
Current home owners with high balance loans can learn about rate -term and cash out Jumbo refinance here.
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