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Jumbo Loan Low Downpayment Options

Get the Low Down

A Jumbo home loan is any mortgage that exceeds conventional conforming loan limits for the County that you’re buying in.

Once your loan amount exceeds the conforming loan limit, everything changes.

The biggest difference is that the automated underwriting guidelines created by Fannie Mae, Freddie Mac, FHA, VA or USDA no longer apply.

Jumbo loans are manually underwritten using guidelines developed by the investor that is offering the loan program. This means that every investor is going to have slightly different rules.

When the mortgage industry collapsed in 2008, these were some of the hardest hit loans. For many homebuyers in the upper price ranges, these loans were difficult to get, and they required really high credit scores and a minimum 20% downpayment.

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Today, jumbo loans are widely available. Standard loans are available most commonly available through depository banks and credit unions.

It is not uncommon for these lenders to have the lowest rates, but they also have most strict guidelines requiring low debt to income ratios, very high credit scores and a large down payment.

Many lenders and mortgage brokers also have access to jumbo loans that tend to be much more flexible, and offer many more options than depository banks or credit unions.

The biggest advantage of using a mortgage lender or broker is that they not only have access to the same standard jumbo loan programs as banks and credit unions, they also have access to low down payment loan options.

Jumbo Loan Options

Unlike conventional or FHA loans, jumbo loan guidelines can vary greatly from investor to investor. Here are some examples of wide range of jumbo loan qualifying guidelines you can find today.

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Lowest Rates – Most Strict Qualifying

  • 40% – Max Debt to Income Ratio
  • 80% Max Loan to Value / 20% Downpayment
  • 700 Minimum FICO
  • 12 Months Reserves

Low Rates – Less Strict Qualifying

  • 43% Debt to Income Ratio
  • 90% Max Loan to Value / 10% Downpayment
  • 690 Minimum FICO
  • 6 to 9 Months Reserves

Good Rates – More Flexible Qualifying

  • 43% to 50% Debt to Income Ratio
  • 90% Max Loan to Value / 10% Downpayment
  • 680 Minimum FICO
  • 6 to 9 Months Reserves

Portfolio Jumbo – Most Flexible Qualifying

  • 50% to 55% Debt to Income Ratio
  • 85% to 90% Max Loan to Value / 15% to 10% Downpayment
  • 620 Minimum FICO
  • 6 to 9 Months Reserves

Piggyback Conventional / Second Mortgage

  • 45% to 50% Debt to Income Ratio
  • 75% to 80% Loan to Value (1st mortgage)
  • 85% to 90% Combined Loan to Value (including 2nd mortgage)
  • 680 Minimum FICO
  • 3 to 6 Months Reserves

Don’t Take NO for an Answer

While the difference between 40% debt to income ratio and 43% debt to income ratio does not sound like much, it can make all the difference in the world if you’re sitting in your local bank and they say that you do not qualify for a loan of this size.

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The important thing to realize here, is that not all lending institutions are going to have all of the same loan programs available to them.  The answer that you will usually get in one of these situations is “Sorry, you don’t qualify”, when in fact, the answer should be “Sorry, we don’t offer a program that fits your credit profile, and here’s a couple of lenders that might be able to help”.

Unfortunately, it’s the policy of most businesses to try to get your business, and if they can’t help you, nobody can.  This simply is not true.

I cannot tell you how many times I’ve been able to “save” a purchase that a depository bank or credit union has turned down, and turned out, with no recommendation to the homebuyer about how to proceed from there.  These homebuyers are usually just told that they do not qualify.

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I cannot stress enough that you should seek out a second opinion.  If you find someone with my experience and access to different programs, and they can cover all of your options and at least lay out everything in front of you so that you can make an educated decision, that’s when you know you’re getting good advice.

When you’re told “NO”, with no further explanation, that’s when you’re being bullied by a lender with only a couple of options and a jealous streak.  If they can’t have your business….nobody can!

Considering All of Your Options

At some point, while there may be options available to you based on your particular credit profile, credit scores, employment type, reserves, debt to income ratio, it still might not make sense on paper to lock yourself into that loan.

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A home loan is not an impulse buy.  If you find yourself in a situation where you don’t quite fit into any box now, pull back, regroup, and make a plan to put yourself into a position to have more options.

You can expect that the lower the down payment, the higher the interest rates and closing costs.  On the other side of this, the higher your down payment and credit scores, you can expect very low interest rates and lower closing costs.

Consider all of your options, do the math, and make an educated decision.

Don’t be afraid to pull out of a deal and take the time to put yourself in a better situation.  Also don’t be afraid to take a lower down payment, higher cost loan for a short period of time until you are in a position to refinance into a better loan in the near future.

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If you choose a portfolio or higher risk option, always have an exit strategy to refinance out of that loan in a reasonable period of time.

How Do I Get My Questions Answered?

All lenders are not created equal.  Most of the readers that find this site because they’ve been researching solutions to challenges, and have been told 10 different things by 10 different loan officers.

We’ve created this resource to help you sift through the endless opinions and articles that may, or may not directly answer your question correctly.

There are several ways to ask questions, and get expert opinions on this website.

  • Submit a Question:  On the bottom of this page, you’ll see a prompt that allows you to ask questions.  These questions come directly to me, and are answered very quickly.
  • Leave a Comment:  Below every article is the option to leave a comment or question.  We see these comments and questions in real time and the always answered, usually pretty quickly.

In addition to researching your questions and providing you with expert advice, I may be able to introduce you to a lender friend that I know has experience with your specific situation and can help.

About the Author

Scott Schang

A 20 year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues, and making sense of complicated real estate and mortgage topics on this website since 2007

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