When shopping for jumbo loans to finance high-cost homes in Arkansas, most lenders require 10 or even 20 percent down payment. Financing a home selling for $1.5 million, that would mean a down payment of $300,000 and a loan amount of $1.2 million. Some banks even ask for more down payment, especially when the loan amount approaches $2 million. When financing jumbo homes and borrowers do not wish to make such a large down payment, there are other options that are very competitive.
The jumbo loan program that asks for the lowest down payment is normally offered in either a single loan or a combo loan option. With a down payment of 5% on a $1.5 million dollar home, the down payment amount is just $75,000 resulting in a single jumbo loan of $1.425 million. The dual loan option, sometimes referred to as a “piggyback” program also asks for just 5% down yet there are two loans instead of just one. Mortgage lenders also refer to the program as an 80-15-5. Again with a 5% down payment, there is a first mortgage at 80 percent of the sales price of $1.5 million, or $1.2 million. There is also a second lien which makes up the difference between the down payment and the first lien. The second lien at 15 percent of the sales price is $225,000. The interest rate on the second lien is higher than the rate on the first lien. With the single loan option, the interest rate is higher than the first lien with the 80-15-5 structure. 10% down payment options are available up to 2.5mil as of 2018.
When adding up the total monthly payments on both loans, the monthly payments will be very similar to one another and each has its own advantages. The good news is neither option requires monthly mortgage insurance. You’ll want to spend some time with your loan specialist to determine which option is better for you and why. But don’t think that just because your bank only offers a jumbo loan that requires a 20 percent down payment there are no other choices. There are plenty of low down payment solutions for well-qualified home buyers.
A few important notes:
- 95% Jumbo options are limited to 1.5mil loan amounts
- 90% Jumbo options are limited to 2.5mil loan amounts
- Eligible property types include only single-family, townhomes, and condos. No vacant land, or new construction (unless being sold by new home builder)
- All properties must be a Primary Residence - no investor home purchases
- Home buyers must be able to fully document income and assets
- Both fix rates and adjustable rate terms (fully amortized) available
- These jumbo programs are available for both purchase and refinance nationwide
- Please read more about the qualifying and credit score requirements for the Jumbo Purchase loan here.
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