Jumbo Loan Down Payment Options
A jumbo loan down payment sets up a high-income earner, with good credit and a solid asset base, an option to acquire a luxury home. Government insurance does not apply because of the size of the loan. It is the lender that assumes the risk associated with these loans, regardless of the amount of the jumbo loan down payment.
Jumbo loan down payment options vary. Looking into these options might be helpful for you if:
The long-term financial commitment of a substantial amount works within your other financial goals.
You have a high credit score.
You have cash reserves.
Your general financial situation is strong.
You would like to purchase a home with a higher price.
Your Credit Score
The credit requirements for jumbo loans are higher than they are for typical conforming loans. Regardless of your jumbo loan down payment, you will need a solid credit score.
A credit score between 680 and 700 is sufficient for some lenders, but other lenders have minimum limits of 720. Your mortgage or rental credit and payment history may be under scrutiny for the last few years, including any line of credit you are holding. The lender needs to verify you can make the payments, because your jumbo loan is not government insured.
Your Debt and Income Levels
The luxury homes being purchased using a jumbo loan down payment carry higher price tags than a typical house. If you are looking to purchase a luxury home, chances are that you have a higher than average income level. High income levels often come with complex, or multiple income sources.
In order to determine what jumbo loan down payment can be offered to you, there will be some paperwork involved. If you are self-employed you may need to provide your tax returns for several years to justify a jumbo loan down payment of a lower amount. This demonstration of ongoing income is important to lenders.
Your DTI will be examined in the process of securing a determination for a jumbo loan down payment amount. A stronger ratio, within the 38 to 43% range is generally optimal. That means that your monthly payment will be 43% or less of your pretaxed income. This is a critical factor to determine the amount of the jumbo loan down payment you will need to make.
Your Cash Reserves
It is always good financial stewardship to have some savings. Specifically, lenders like to know you have several months of payments put aside in reserve. Since jumbo loans are larger, it may be that your lender asks that you demonstrate you have 6 months to a year’s worth of payments put aside. By demonstrating your ability to make these payments with your cash reserves, it can lower the jumbo loan down payment requirements.
Lenders have different requirements for the amount of cash reserves you will need, but they also have different guidelines for the liquidity level of your reserves, too. After you have made the jumbo loan down payment, there could be an expectation that you have up to 50% of your cash reserves in a checking or savings account. The rest of the reserves could be less liquid, so usually retirement assets are considered.
The down payment for jumbo loan amounts vary in every situation. The value of the home and your financial situation combined create a unique circumstance that will impact your jumbo loan down payment required amount.
For more information, and to see if you would qualify for the Jumbo Loan 10 Down option, get qualified now for a jumbo 10 down loan online or call (800) 720-2515 and speak to a jumbo loan expert.