Low Down Payment Jumbo Loans with No Mortgage Insurance
Looking for low down payment jumbo loans with no mortgage insurance with as little as 3.5% down? Most lenders require a minimum of 10% down, but the new no mortgage insurance jumbo loan down payment is:
- 3.5% down up to a maximum loan amount of $1,500,000.
- 5% down up to a maximum up loan amount of $1,750,000.
- Have other options with loan amounts greater than $1,750,000.
Jumbo loans are treated differently than traditional loans because they do not conform to FHFA’s conforming loan limits.
Jumbo vs Fannie Mae and Freddie Mac Conforming Loans
Some lenders follow Fannie Mae and Freddie Mac’s guidelines, but most lenders have an external rule on top of an agency guideline called an overlay for a traditional loan. The biggest difference, although the loan process is very similar to a traditional conforming loan, is the loan limits.
Loan limits for traditional loans just increased in 2022 but may not be enough with home prices rising at the pace they are for some buyers. On a case-by-case scenario, the downside of a jumbo loan can be:
- Stricter on debt-to-income ratios.
- Higher credit score requirements.
- May require a second appraisal.
- May or may not have higher borrowing costs.
- May be subject to greater scrutiny when it comes to guidelines.
The biggest advantage to the new low down payment jumbo loans with no mortgage insurance is the fact that the down payment starts at 3.5% with no mortgage insurance.
No Mortgage Insurance Jumbo Loan
Traditional conventional loans require mortgage insurance, unless bought out, when the down payment is less than 20%. The mortgage insurance percent depends on factors such as:
- Loan-to-value.
- Loan amount.
- Loan purpose.
- Zip code.
- Housing expense ratio and debt-to-income ratio.
- Credit score.
- Property type and number of units.
- Occupancy type.
- Loan type.
- Term of loan.
- May include other factors when calculating mortgage insurance.
For the low down payment jumbo loans with no mortgage insurance, these factors are taken into consideration when quoting an interest rate.
Pre-approval Process for a Jumbo Loan with No Mortgage Insurance
With as little as 3.5%, the pre-approval process is the similar as a traditional loan. The process can be broken down into 4 steps:
Step 1: connect with a licensed Mortgage Loan Originator to get a list of documents for underwriting and processing.
Step 2: gather documents required for underwriting and processing.
Step 3: go over information for the application and authorize a credit pull.
Step 4: discuss results and ask for a pre-approval letter to start shopping for a home.