How to Buy a New Home Before Selling Your Current One!!!

Living in a “crowded house” but can’t find a way to buy that perfect new home before selling your existing one?  Don’t dream it’s over! There are mortgage programs that are specifically created to allow you to use proposed rental income from your existing home — also known as a “departing residence” in this case — to help with your mortgage qualification.  After all, most Americans are working hard enough to afford one mortgage payment, let alone two.

If you’ve been told that you don’t qualify for a new home until you sell your current home, but you otherwise have a down payment saved and ready to go, get in touch and let’s see if a departing residence mortgage is a good fit for you.

There is freedom within,

Rob Spinosa
SVP of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

How to Rock a 10% Down Payment!!!

Why go home to your grungy apartment when you can buy your first home instead?  Oh, what’s that?  Haven’t saved the full 20% down payment?  Live in a part of the country where home prices and loan sizes easily outpace the capacity of conforming, FHA and even VA loans?

Let’s learn how to rock the best of the 10% down jumbo mortgage options, some without PMI, and jam on why with a changing real estate market, you may be in luck with half the down payment you thought it might otherwise take. 

Jeremy’s spoken,

Rob Spinosa
SVP of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

How to Rock a Family Opportunity Loan

Looking to purchase or refinance a home for your elderly parents who wouldn’t otherwise be able to obtain a mortgage on their own?

Looking to assist a disabled or special needs adult child with housing or his/her own?

Or how about putting a college-bound child into off-campus housing that you decide to purchase?

All of these are both common scenarios and often difficult ones as viewed by the inflexible guidelines in the mortgage industry.  Until now…

The Family Opportunity Mortgage can be a great way to thread the needle of otherwise detrimental occupancy requirements for primary homes, second or vacation homes and investment/rental homes.  And if used in the right situation, the Family Opportunity loan will often permit you to obtain lower rates and lower down payment requirements.

So, let’s get so low in the weeds like sisters Anne and Nancy Wilson of Heart and ambush this beneficial mortgage program today! 

Grateful to know about the Family Opportunity loan?  Give me a like or subscribe on YouTube!

Ooh, barracuda!

Rob Spinosa
SVP of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

How to Rock a Bridge Loan

If you’ve been lamenting how tough it is to get your offer to buy a home accepted these days, think about how much more difficult it is for those who must buy a new home BEFORE selling their existing one.  After all, it’s practically impossible to make a contingent offer — defined as one that would allow you to sell your existing home first.

It’s usually in this stressful environment that someone well-meaning; a friend, a co-worker, even a Realtor, will swoop in and advise our buyer to “Just get a bridge loan!,” as if there is a simple, ready-made solution for our otherwise complex problem. 

So, let’s go under the bridge and learn about the waters that run the “buy before sell” dilemma.  Let’s figure out if a bridge loan is the right fit for you, or if perhaps a HELOC, a cash-out refinance or some other mortgage product can help you reach the higher ground. 

If you don’t ever wanna feel like you do right now, and you want to buy that great new place before you sell your current property, give me a like or subscribe on YouTube!

Give it away, give it away, give it away now,

Rob Spinosa
SVP of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

How to Rock Cryptocurrency As Your Down Payment

The mere mention of the words “bitcoin” or “cryptocurrency” or “blockchain” is sure to evoke comments and reactions that will be far-reaching.  There will be the speculators who rolled the dice and came up winners, or who are still white-knuckling their wild ride.  There will be financial technicians who have been forced to grasp how this technology has the potential to disrupt the exchange of currency as we know it.  But more than the reactions of either of these two subsets, you’ll encounter the expressions of the mostly and mildly bewildered.  Because really, when it comes to cryptocurrency, most people are downright confused:

  • About what it is.
  • About how it works.
  • And for us in the real estate world, about whether you can use bitcoin and other digital currencies to buy residential real estate.

So take a quick video tutorial with me on how to rock the use of cryptocurrency as your down payment!

Thinking about rocking the rebel currency on your next home purchase?  Give me a like or subscribe on YouTube!

Ground control to Major Tom,

Rob Spinosa
SVP of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

10% Down Payment Mortgage

But I don’t get it.  2020 started just like the many of the years that preceded it.  Sure, there was a seasonal slowdown in home buying activity as we got through 2019’s holiday season and got the new year underway, but with interest rates at historic lows, a strong seller’s market in the San Francisco Bay Area and lots of buyer competition for any desirable home that came on the market, it looked like deja vu all over again for anybody looking to purchase a home.  In other words, here we go again with having to come up with a large down payment (or even all cash), a push to offer without any contingencies in your contract and a general sense that it was going to take an act of God to actually get into contract.

Well, we got the act of God part.  Just not the one that any of us, save for the disbanded Global Health Security and Biodefense Unit, had planned on…

So, here we are, going into the heart of the spring buying season, in the middle of shelters-in-place and a COVID-19 pandemic.  Yet with all due respect given to the very real health concerns most of us share, real estate is an essential activity and some buyers and sellers have no choice but to be “on the market.”  For a handful of these buyers, who are not yet in a position to have saved a full 20%, or who have seen the value of their stock portfolios decimated by recent market volatility, a 10% down payment may be the only realistic way to purchase a home during the months to come.

The good news is that they can still do it.

“What is 80-10-10 Financing?”

I remember my grandmother calling the refrigerator a “Frigidaire” and our jeans “Dungarees.”  So it is with 80/10/10 financing.  It’s sort of the brand name we bandy about when what we’re really discussing is a concept, and the manifestation of that concept is subordinate financing, AKA as a “piggyback loan.”  Most simply described, a buyer using this structure will be obtaining two loans instead of one in the purchase of a home.  This is often referred to in broad strokes as an “80-10-10” loan.

“How Do 80/10/10 Loans Work?”

When we say “80/10/10” we are specifically implying the following:

  • A first mortgage to 80% of the home’s purchase price.
  • A second mortgage equal to 10% of the home’s purchase price.
  • A buyer’s down payment for the remaining 10% of the purchase price.

Since the lending world is replete with guidelines, it doesn’t always play out exactly this way, and for any number of reasons.  Just keep in mind that “80-10-10” could also just as easily be 75-15-10, or sometimes when we need to use a conforming first mortgage, you could even see a 62-28-10, for example.  You get the idea, we don’t always have to be at a strict 80% and 10% for the loan amounts.  But no matter how we structure the transaction, the sum of both loan amounts plus the down payment will equal 100% of the purchase price.

“Can I Qualify for a Piggyback Mortgage”

 When obtaining a jumbo 80-10-10 loan, the first mortgage will typically be a fixed rate loan (30-year fixed) or a hybrid ARM (10/1 ARM, 7/1 ARM or 5/1 ARM).  The second mortgage is most often a home equity line of credit (HELOC).  There can be different qualifying criteria for both loans and your loan officer will have to navigate two sets of guidelines in most cases.  Not all loan originators are adept at subordinate financing but for my clients, the pre-approval process for a piggyback loan is identical to the process for obtaining a single loan — we understand it on every level.  While an 80-10-10 can sometimes be harder to obtain than a single loan, there are also cases where it can enable an approval that otherwise would not exist.  For example, a buyer may not qualify for a single loan of $750,000, but may pass with flying colors if the loan is restructured as a first mortgage of $625,000 and a second loan of $125,000.  Same total sum borrowed, but two very different outcomes.

In a very uncertain time, we presently have the capacity to allow a buyer to make a 10% down payment, using the 80-10-10 structure, on a purchase price almost as high as $2,200,000.  And here in the San Francisco Bay Area, this is not an uncommon scenario.  Sellers may not have the luxury of waiting around to get multiple offers in a market defined by the great uncertainty we all face today.  But in these challenging times of being shut in, will lie opportunity for the buyer who may have previously been shut out.  If I can help you better understand the inner workings of a 10% down payment mortgage option, we are available and open for business.

Take care and stay safe,

Rob Spinosa
Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959
rob.spinosa@rate.com
Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960
Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

#OKBoomer, You Don’t Need 20% Down

Bound to happen from time to time in the digital age, a saying goes viral — in this case, “OK, boomer,” — which is meant to expose a close-minded or out-of-touch opinion, thought or mindset of one generation by another (I’ll let you figure out the age demographics here). Hopefully, the topic of this blog will transcend generational differences and address the assumptions about the down payment one needs to make when purchasing a home, versus the reality of what we see every day with those who are actually buying homes. I think you’ll be surprised at the expanse between fact and fiction.

Let’s start by saying that in the US, it’s been widely assumed that a homebuyer must make a 20% down payment of the purchase price. This concept has been propagated from one generation to the next and since Americans have been buying homes instead of carving them out of frontier land. In fact, not a week goes by where we don’t get a call from a prospective buyer that starts with an iteration of, “We’d like to buy our first home but we haven’t saved 20% yet…” Yet, over at least the last 20 years, the average down payment across the US has hovered closer to 6 or 7% of the purchase price. A far cry from the gold-standard 20% many buyers struggle to save. Let’s look at the number of ways that contribute to a buyer’s access to lower down payments:

0% Down Payment

Veterans and those in rural areas may have access to 100% financing. The VA loan program is a huge benefit and great way for our industry to show appreciation for those who have served our nation. The USDA loan program has geographic restrictions, but for some may also allow access to the financing without a down payment.  VA loans also have access to 0% or reduced down payments at loan levels that exceed the nationwide, $484,350 1-unit max.

3% Down Payment

Conforming loans still permit a 3% down payment up to a loan amount of $484,350 (thus permitting a purchase price of approximately $510K at max leverage). Yes, these loans have PMI, but they can be a great entry program for the first-time buyer, and they are not restricted to veterans, rural areas, income limitations or property types. Conforming loans are accessible by all who qualify and programs like the Home Ready mortgage have PMI that is less expensive as well.

3.5% Down Payment

FHA loans come in at 3.5% down, and in many areas, FHA loans are the bread and butter of the market. Borrowers with lower FICO scores, higher debt-to-income ratios and other challenges that could trip up a conforming loan, may find the FHA program to be the best fit. And, FHA will permit 3.5% down even in high-cost areas where the conforming loan limit exceeds $484,350. Remember that on conforming loans, even in high cost areas, once above a loan amount of $484,350, the down payment requirement steps up to 5%.

5% Down Payment

Conventional, high-balance (or super-conforming) and even jumbo will come into play with a 5% down payment. Again, the higher loan amounts and purchase prices may not touch every state, but across the country stats have proven that this level of initial investment is closer to the norm when it comes to buying into the real estate market.

10% Down Payment

Even in super jumbo land (loan amounts that exceed the high-balance conforming limits) and up to price points that much of the country would consider absurd ($3MM+), believe it or not, a 10% down payment mortgage is an option. And we do them with frequency here in CA. For a while, the toughest aspect of getting a 10% down loan had nothing to do with the borrower, but instead we observed that sellers in competitive markets overlooked these offers in favor of buyers who structured their financing with a larger down payment. Now that we’ve seen some softening in the higher price points, motivated sellers are again considering qualified buyers with 10% down payments.

If you examine the statistics for down payment patterns, you’ll see that some states, like California, tend to trend toward the higher end of percentage down payments (approaching 20%). This is due to higher purchase prices in many cases and the fact that those prices push out some of the programs that permit lower down payments. But in other states (GA, for example), home prices in concert with percentage of veterans, rural areas, and so on, can push the down payment average percent below 3%. As always, all real estate is local and you should consult with local professionals on your options. But make no mistake, boomer or otherwise, you don’t need 20% to get into most markets. And if you have questions, send me a letter or give me a call or page me or e-mail or text or Skype or message me when you’re ready to set aside your preconceived ideas and focus on the way it really is today.

Stop, hey, what’s that sound? 

 

Robert J. Spinosa
Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959
rob.spinosa@rate.com

Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate. In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

Investment Property Jumbo Mortgage with Low Down Payment

Since I’m in California, and property values where I live and work tend to be on the, shall we say, higher side, residential real estate investors — those looking to purchase a home of 1- to 4-units to be used as an income-producing property — can sometimes be limited in their attractive jumbo mortgage options. This is especially true if they are looking to keep their down payment as low as possible. Many potential rental property buyers are told flat out that even a 20% down payment is California dreamin’, and that a jumbo loan on a duplex or triplex, for example, requires a 30 or even 35% down payment. So in addition to being known for good vibrations and sun, let’s talk about our proclivity for innovation and examine some of our low down payment jumbo mortgage programs specifically catered to investment properties.

15% Down Payment

For a property of 1 to 4 units, we’ll lend up to $1,000,000 at a loan-to-value (LTV) of 85%. This implies a max purchase price of about $1,175,000 at the highest LTV. There is no PMI on this loan.

20% Down Payment

For a property of 1 to 4 units, we’ll lend up to $1,500,000 at a loan-to-value (LTV) of 80%. This implies a max purchase price of $1,875,000 at the highest LTV.

25% Down Payment

For a property of 1 to 4 units, we’ll lend up to $2,500,000 at a loan-to-value (LTV) of 75%. This implies a max purchase price of approximately $3,300,000 at the highest LTV.

Investing in real estate can be elusive where the property values are expensive and where the buyer doesn’t have 30% or more to put down. But we strive to lead the market with loan options that can turn buyers into landlords with even half of what they may have expected to invest at the start.  Further, with the capacity to accommodate multi-unit properties, some of these lower down payment programs can and do cash flow from Day 1.  If you are on the cusp of making your first rental property purchase, get in touch any time and I’ll be happy to review your options with you.

New lease on life, 

 

Robert J. Spinosa
Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959
rob.spinosa@rate.com

Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate. In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

What’s a Piggyback Mortgage?

As if! As if mortgages weren’t complex enough, now you’re going to tell me there’s such a thing as TWO mortgages stacked on top of each other — just to buy the same home you could otherwise get with one mortgage?  Are you a glutton for punishment?

OK, calm down. You’re correct about the part that adding a second, or “piggyback,” mortgage might add complexity, but you’re not quite right about the fact that our buyer could have just as easily killed the proverbial financing bird with one stone/loan. Often, when we suggest borrower consider secondary financing, aka a piggyback loan, there’s a good reason for it, and we’re going to cover the top three of them below. If you view piggyback loan options as another tool in the mortgage toolbox, then you’ll start to see the value they provide when certain circumstances arise. So let’s jump into the mud with the pig.

Avoiding PMI

Most buyers are aware that once their loan-to-value (LTV) exceeds 80% (in other words, they have less than a 20% down payment), they will be faced with private mortgage insurance (PMI). Some will therefore try to avoid this by breaking the financing into two loans, with the first mortgage at 80% of the value of the home, and the second or piggyback loan filling in the gap between the first mortgage and the buyer’s down payment. Classic example: $500K purchase price and a 10% down payment ($50K). The loan amount would be $450K and the buyer would have PMI, unless the buyer gets a first mortgage at $400K and a piggyback loan at $50K. In the piggyback example, the buyer is still going to finance a total of $450K, but because his first mortgage LTV is not over 80%, there is no PMI. Now, this same buyer will need to compare the terms of the financing. Will it be better/cheaper to go with PMI or the piggyback? Only the research will tell.

Circumventing Conventional Loan Limits

In the above example, we used a piggyback loan to avoid PMI, but what about purchase price points that would force an 80% LTV to be just above the conventional conforming loan limit? Same deal. Some of these buyers will circumvent that cutoff by using a piggyback. Today, for instance, the conforming loan limit in many areas is $484,350. But let’s say the buyer is considering a home that will sell for $675K. At 80% LTV, the loan amount would be $540K — above the conforming loan limit by $55,650. So, from time to time, we’ll see a buyer get a $484,350 first mortgage coupled with a $55,650 second mortgage and voila’, jumbo mortgage avoided.

Jumbo 80/10/10

Speaking of jumbo mortgages, especially in higher cost areas like the San Francisco Bay Area, even if you endeavor to buy a median-priced home with less than a 20% down payment, you will need a mortgage solution that often deviates from a single loan.  Jumbo 80-10-10 options have been popular in our neck of the woods since at least 2015 and the reasons for that are primarily that the terms are very competitive and there is no PMI. If a buyer wishes to purchase real estate with less than 20% down and we’re talking about price points up to $2MM, we almost always consider a piggyback loan as one of the first tier options. In some parts of my county (Marin), in San Francisco, on the Peninsula and in the Silicon Valley, one can easily find a typical residence in the $1.2MM price point. If you’re putting 10% down on something like this, you’d have a first mortgage at $960K and a second mortgage, usually a HELOC, at $120K. This would be contrasted with any other single-loan jumbo option, though as the price points increase, it gets harder to find and qualify for such programs for many buyers.

While we always try to keep matters as simple as possible, because we realize that real estate transactions are inherently complex, sometimes there’s just no good way to avoid a piggyback mortgage solution. When you find yourself in this situation, we can help and we offer a wide array of both first and second mortgage programs that can be combined together to meet your needs. Oh, and when you do need a piggyback setup, we handle both loans as part of your singular process. We don’t send you out into the mud to fend for yourself on the first or second loan. We’ve got your (piggy) back.

Ha ha, charade you are, 

 

Robert J. Spinosa
Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959
rob.spinosa@rate.com

Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709
*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate. In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

 

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

Jumbo Mortgage with 5% Down Payment

You never hear anyone say “Give it 95%!,” do you? And, curiously, when it comes to getting a jumbo mortgage, that still holds true — the vast majority of home buyers still think it takes a 20% down payment to enter the market. As of 2019, there are 34 metropolitan statistical areas (MSAs) in California that have a maximum conforming loan limit of $484,350. Another handful of counties can only get to a jumbo-conforming limit of around $550,000. So what do these homebuyers do if they have a maximum of a 5% down payment yet need to exceed the conforming or FHA loan limits? Are they shut out or can they actually buy a home with a jumbo mortgage? The good news for them is that we will continue to lend up to $650,000 with as little as 5% down (for a maximum purchase price of approximately $685,000) and we’ll pick up where their county’s conforming loan limits may leave off. And, in many cases, we can make these 95% loans without PMI, or private mortgage insurance. Using our LPMI (lender paid mortgage insurance) program, we can go to a loan amount of $850K with just 5% down, giving these buyers the reach up to a purchase price of almost $900K. Let’s dive 100% in and look at the key features of our 5% down jumbo program.

There are a few key distinctions between a jumbo and conforming loan and it’s important to understand these if you are going to purchase a property in a higher price range. All of these aspects can be sorted out at the time you get a pre-approval from us, and this process does not cost you any money or involve any obligation. Your preapproval is valid for at least 90 days and can be refreshed if your search extends beyond that time period. Let’s focus on the Big 3; FICO scores, asset reserves and debt-to-income (DTI) ratio:

FICO Minimum for 5% Down Jumbo

You’ll need a minimum 700 FICO score to get to a loan amount of $650K and a 720 FICO up to $850K. For jumbo mortgages in general, especially at a higher loan-to-value (LTV), getting down to 700 is very generous. Of course, the higher your FICO the better your loan’s rate might be, but it’s good to know you can still qualify with greater than a 700 (or 720) score.

Asset Reserves for 5% Down Jumbo

Reserves are a component of getting a jumbo loan — c’est la vie, as they say. But fortunately our 95% LTV jumbo loan does not have an onerous reserve requirement. In fact, in some cases we need just two months of reserves but for most options here, it is never greater than six months. Compared to other 90% jumbo mortgage options that require 18, 24 or 36 months of reserves, this makes qualifying far easier. Remember, reserves are calculated from your total monthly housing payment (PITI). If you have a PITI of $4000 and you have a 6 month reserve requirement, you need to have $24,000 left in your bank account(s) after you close your purchase transaction.

Debt-to-Income (DTI) for 5% Down Jumbo

Since this is a jumbo mortgage, your debt-to-income ratio will need to be under 43% in most cases. How do we arrive at this number? Let’s say you have a gross monthly income of $10,000. If your housing payment is $4000, you have a 40% “front end” or “housing” DTI ($4000 / $10,000). Let’s say you also have a car payment of $250. Now you have a debt ratio of 40% over 42.5%, and you’d still qualify. Your “total” or “back end” ratio is your proposed housing payment, plus any other monthly debts that come over from the credit report. Total debts divided by gross income equals total DTI.

The long-held belief that it takes a 20% down payment was shattered long ago when we offered competitively priced 10% down payment solutions up to price points of $2MM. Many buyers still take advantage of those programs today. But even where the price points go to $700K or even $900K, now buyers have the option to bring in only 5%, often without private mortgage insurance (PMI). If you want to know more and are intent on getting out of the rent cycle, call me today and let’s see if this program is a fit for you.

Gimme five, 

 

Robert J. Spinosa
Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959
rob.spinosa@rate.com

Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate. In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283