Credit Requirements, Property Eligibility and Jumbo Loan Down Payment Options
If you are thinking about purchasing a house that will cost you $500,000 or more you are probably looking at a jumbo loan. This may have you pondering the jumbo loan down payment options. If you don’t have the half mil sitting in the bank in cash, you still have some solid options for how to proceed.
Credit Requirements and Down Payment for Jumbo Loan
The credit requirements are significantly stricter for these larger value loans. There is a higher risk associated with carrying a jumbo loan for the creditor because they are not guaranteed by Freddie Mac or Fannie Mae. That is why the jumbo loan down payment question is so key.
For approval you will:
- Have an exceptional credit score, likely over 700, although some lenders work with scores over 680.
- Have a low DTI (debt to income ratio), absolutely 43% or lower, the closer you are to 36% the better.
- Have cash reserves available to cover several your payments, in addition to your jumbo loan down payment. This cash can be a combination of liquid cash from your savings or checking accounts, plus money from your retirement savings.
The details of your loan will depend on several considerations. The value of the house you purchase, the amount of your jumbo loan down payment, and your financial situation matter.
There are restrictions on the property eligibility, regardless of the amount of the jumbo loan down payment. Jumbo loans can be used for financing several kinds of properties.
- High-cost Area Single Family Residence
- 1 to 4 Unit Single Family Dwellings
- Most Counties Allow Investment Property
- Many Counties and Lenders Allow a Second Home
- Short Sales or Foreclosed Homes May have Eligibility Limits
- Condominiums may have specific limitations with different jumbo loan down payment requirements.
A Down Payment on Jumbo Loans – Options
The down payment for jumbo loan requirements have become less strict lately. Lenders have previously required the home purchasers to pay 30% of the purchase price. Now the option is available to make a down payment of the conventional 20% amount. Lenders have become more interested in working with individuals with strong credit, solid assets and high income levels, so jumbo loans are a natural way to provide a service for this group.
Jumbo Loan 10 Down
Recently, minimum jumbo loan down payment amounts have dropped to 10 to 15%. Since interest rates are lower, payments are lower, making the higher loan values more affordable for home purchasers.
When you are looking to purchase a home over $500,000, you will need to consider the options for your jumbo loan down payment. Maintaining adequate cash reserves, while supporting the purchase of your new home is what a lower down payment for jumbo loan figure can do.
Your situation is unique. If you have already found that home, or if you are just at the beginning stages of searching for real estate, now is the time to get qualified for a jumbo mortgage.