topic Re: Lending Options for Jumbo Loan with 5% down in Mortgage Loans

Lending Options for Jumbo Loan with 5% down

Anonymous — Tue, 06 Sep 2016 17:43:13 GMT

Hi all!

My name is Steven, and my wife and I were looking to buy a home down here in Orange County, CA soon. I've called a few banks and talked over the phone briefly with a lender referred to me by a friend, but I am figuring there has to be a more efficient way to get myself lined up with a lender who can approve me for a loan with my specific requirements. I am wondering if anyone in this community who has had experience with or knows of a lender I could reach out to with the following requirements?

1. 720 median FICO mortgage score. (there may be some options to improve this to the 740+ range, but I'll create a seperate post for that)

2. Home price of 900k, 5% down, so financing 850k.

3. 6 months of reserves available, possibly 7 to 8 but not more than 12

4. Income should not be an issue, total DTI looks to be around 35-36%

Based on my current research, it looks like my options are to find a primary lender who could do an 85 or 90 LTV (I know of a few who have claimed they can do this without MI), and then source a piggyback second mortgage lender so that I would end up with an 85/10/5 loan or 90/5/5 loan. Any suggestions or advice would be appreciated, thanks!

Steven

Re: Lending Options for Jumbo Loan with 5% down

youdontkillmoney — Wed, 07 Sep 2016 05:23:33 GMT

@Anonymous wrote:
Hi all!

My name is Steven, and my wife and I were looking to buy a home down here in Orange County, CA soon. I've called a few banks and talked over the phone briefly with a lender referred to me by a friend, but I am figuring there has to be a more efficient way to get myself lined up with a lender who can approve me for a loan with my specific requirements. I am wondering if anyone in this community who has had experience with or knows of a lender I could reach out to with the following requirements?

1. 720 median FICO mortgage score. (there may be some options to improve this to the 740+ range, but I'll create a seperate post for that)
2. Home price of 900k, 5% down, so financing 850k.
3. 6 months of reserves available, possibly 7 to 8 but not more than 12
4. Income should not be an issue, total DTI looks to be around 35-36%

Based on my current research, it looks like my options are to find a primary lender who could do an 85 or 90 LTV (I know of a few who have claimed they can do this without MI), and then source a piggyback second mortgage lender so that I would end up with an 85/10/5 loan or 90/5/5 loan. Any suggestions or advice would be appreciated, thanks!

Steven

^^^^^

I just closed on a 10% down jumbo in Los Angeles county.

Only big banks that offered 10% down on a jumbo was wells fargo and us bank.

Us bank also offered a 90/10/10 piggy back.

It worked for me because of 800+ mortgage scores, stable 10-year job history and $300K total income, and DTI = 0%.

Your FICO may be tough even for 10% for banks, let alone 5% down.

At 10% down Wells wanted 12 months reserves (can be from retirement)

I did not ask about 5% down programs but 10% was tough enough for my excellent stats. You can read my 10% down jumbo here: http://ficoforums.myfico.com/t5/Mortgage-Loans/My-1-Million-Mortgage-Journey-Here-We-Go/td-p/4575733

Try private mortgage brokers also, US bank was willing to do piggy back loans but there rates were relatively high, I went with Wells instead.

Maybe others on here can offer better advice than I can.

5% is a tough sell for jumbos for $900K purchase price in my opinion given you overall stats as described.

Re: Lending Options for Jumbo Loan with 5% down

Anonymous — Wed, 07 Sep 2016 17:32:52 GMT

I would look at NFCU as well. They have low down payment programs with no PMI. They do Jumbo .

Re: Lending Options for Jumbo Loan with 5% down

Revelate — Thu, 08 Sep 2016 00:26:03 GMT

Huh, NFCU has a first time homebuyer's program with $0 down up to $1M. *boggle*

In general 10% is the best I'm aware of from the major lenders who dominate the jumbo space; if any one of them went to 5% I assume it would make the national news cycle even in this election year.

Re: Lending Options for Jumbo Loan with 5% down

tjmolly — Thu, 08 Sep 2016 01:07:33 GMT

Wells Fargo, Regions, BB&T, and a few other have 0% down, no PMI with 720 FICO IF you are a physician, FYI.

Re: Lending Options for Jumbo Loan with 5% down

StartingOver10 — Thu, 08 Sep 2016 02:43:25 GMT

@tjmolly wrote:
Wells Fargo, Regions, BB&T, and a few other have 0% down, no PMI with 720 FICO IF you are a physician, FYI.

^^^I haven't seen this with zero down at 720 on a jumbo loan.

Re: Lending Options for Jumbo Loan with 5% down

youdontkillmoney — Thu, 08 Sep 2016 03:20:59 GMT

based on my research unless you are a practicing doctor, lawyer, CPA 5% down is not really available in California, this mortgage broker/lender has 5% down for calif residents, but got to be a doctor, attorney, etc; their standard program for everyone else jumbo is 10% down:

http://cal-lending.com/california-home-loans/super-jumbo-loans.html

Re: Lending Options for Jumbo Loan with 5% down

Anonymous — Thu, 08 Sep 2016 06:33:00 GMT

Again, NFCU will do a jumbo with 0% down. In California.

Re: Lending Options for Jumbo Loan with 5% down

Anonymous — Thu, 08 Sep 2016 15:04:39 GMT

Thanks for the replies everyone! I intend to document my journey here similar to how others have in the past so people in my boat can hopefully learn something. I am a municipal water design engineer so I unfortunately would not qualify for any of the great programs offered to doctors and the like. My grandfather did serve in the Navy however so there is a chance NFCU could work out.

I would love to be in the boat where I have 10% down with an 800 credit score but unfortunately that just isn't reality. My credit is perfect with a 13 year history minus a bogus verizon collection account in 2014 Verizon refuses to admit fault to and will not remove despite my best efforts. I suspect it is suppressing my score by a significant amount. My wife's credit is also perfect and luckily she never had to deal with Verizon, so all three of her FICO 8 scores are 800+ so I never bothered pulling her mortgage scores.

Like most of you I'm sure, my work schedule hasn't been forgiving to say the least and it's been a slow process getting in touch with any lenders. I did get a message back from Guild Mortgage offering 5% down on jumbos up to 1M. 740 FICO required and 12 months reserves. You also are required to pay MI. Not an option for me, so cross them off the list. Will contact NFCU next.

Re: Lending Options for Jumbo Loan with 5% down

youdontkillmoney — Thu, 08 Sep 2016 21:42:21 GMT

@Anonymous wrote:
Thanks for the replies everyone! I intend to document my journey here similar to how others have in the past so people in my boat can hopefully learn something. I am a municipal water design engineer so I unfortunately would not qualify for any of the great programs offered to doctors and the like. My grandfather did serve in the Navy however so there is a chance NFCU could work out.

I would love to be in the boat where I have 10% down with an 800 credit score but unfortunately that just isn't reality. My credit is perfect with a 13 year history minus a bogus verizon collection account in 2014 Verizon refuses to admit fault to and will not remove despite my best efforts. I suspect it is suppressing my score by a significant amount. My wife's credit is also perfect and luckily she never had to deal with Verizon, so all three of her FICO 8 scores are 800+ so I never bothered pulling her mortgage scores.

Like most of you I'm sure, my work schedule hasn't been forgiving to say the least and it's been a slow process getting in touch with any lenders. I did get a message back from Guild Mortgage offering 5% down on jumbos up to 1M. 740 FICO required and 12 months reserves. You also are required to pay MI. Not an option for me, so cross them off the list. Will contact NFCU next.

^^^^

best of luck to you...I hope you get what you are after......

Re: Lending Options for Jumbo Loan with 5% down

Anonymous — Fri, 09 Sep 2016 00:29:42 GMT

Be sure to check out the NCFU threads in Personal Finance... there is a backdoor into NFCU if your family's history doesn't work out.

Re: Lending Options for Jumbo Loan with 5% down

Erick12 — Fri, 09 Sep 2016 16:09:47 GMT

Have you tried going to arbitration on the Verizon collection? I think they have arbitration provisions for all/most of their services, don't know what specific part of the company you got the collection from. I had a BS collection from a closed FIOS account, went to arbitration and they folded near immediately.

Re: Lending Options for Jumbo Loan with 5% down

Anonymous — Sat, 01 Oct 2016 13:37:11 GMT

Hi Eric, sorry I forgot to thank you about the arbitration tidbit. I looked into that, and it seems that process is for bogus charges. Mine was a legitimate 200 contract termination fee, however their system did not "see" my payment until I called to complain and it magically appeared, but by that point damage was done.

Re: Lending Options for Jumbo Loan with 5% down

Anonymous — Sat, 01 Oct 2016 14:14:50 GMT

Update to my journey:

I've found 2 lenders thus far that offer 100% financing on jumbo mortgages: BNY Mellon and NFCU. I have not had time to get additional info from BNY Mellon yet, but I did start the preapproval process for NFCU and figured I would share my findings each step of the way for everyone's benefit.

9/29/16

Called NFCU and asked about DTI limits and other specifics in an "if I applied today" scenario. Previously I thought I'd have to have 5% down plus closing costs on hand, but since that might not be the case I could potentially start getting preapproved and start serious shopping right away. Essentially they were rather vague, until I was willing to give them specific numbers. I asked if I could qualify for a $1M mortgage for 0 down with my existing circumstances, she ran the numbers and said yes my DTI was more than acceptable to qualify. Further, she explained to me all of their homebuyer's choice jumbo products, which actually includes 3 items:

HBC Jumbo 3/5 ARM

HBC Jumbo 5/5 ARM

HBC Jumbo 30-year fixed

The interesting thing about their ARMs are there is no funding fee whatsoever. And, if you elected not to buy down your base rate, you would not have an origination fee either. Essentially the only fee you would pay to close your mortgage would be the trivial stuff like appraisal, title, credit check, etc etc. Interesting stuff! At this point I am thinking the 5/5 ARM would fit my situation pretty well since we should have 20% in equity in the house after approximately 5 years, and we could always refinance at that time. Even if the rates took a hike for 30 year jumbos, so long as they didn't rise higher than about 2% we still come out ahead. Need to do the math more precisely for a better approximation, but will save that for later. Looks like it's time for a preapproval, there are a couple houses on the market we are interested in, and Oct is a great month to buy.

9/30/16

Walked into a NFCU branch around 3pm and informed the nice lady we would like to officially begin the preapproval process. She collects the standard information from my wife and i, and asks me which product I was interested in for number crunching purposes. This does not commit me to a product she assured me. I said okay and indicated the 5/5 ARM. She put that all together and told me I was in their system, and that I should be expecting an email with a link to upload documents. After my documents were uploaded she said they would do a hard pull on my credit. I said no problem. Interestingly, before we walked out of the branch though, she said the system did an automatic soft pull and tentatively set us at a 3.75% APR for the 5/5 ARM. Could my 720 mid FICO be enough?? Fingers crossed for the final outcome, I am expecting the worst though.

I get home and 2 hours later we get the email to upload documentation. I pull everything together and submit a total of 18 seperate docs. That should keep them happy enough for now. Our situation has many complicating factors, thus the need for all the docs I uploaded, but I'll go into those specifics if they end up being issues.

10/1/16

MyFico alerted me to a hard credit inquiry this morning so I'm glad to see the process is moving along. Updates to come.

Re: Lending Options for Jumbo Loan with 5% down

Anonymous — Thu, 06 Oct 2016 16:12:35 GMT

10/5/16

Recieved a call from my NFCU lender that my application had passed through it's initial verification process (I am not sure what that means) and that I was approved for their Home Buyers Choice Jumbo 5/5 ARM. $1,000,000 loan limit (the maximum they offer) with 0 down @ 4.25%, with several options to buy down the rate should I choose. Finally! Closing costs on the maximum loan amount are 19,000 from the GFE, which includes all the standard prepayment of taxes and insurance as well as additional funds for an escrow account. The reason it is so low is because Navy does not charge any lender fees for their ARMs.

Some additional info on their 5/5 ARM which I requested so I could get a sense of where things might fall in 5 years time: They us the CMT 5 year for their index, and a margin of 2% for these loans. Taking a quick glance at CMT 5 year past performance, and from what I can interpret this index does not look too volatile, with yearly trends not sloping too drastically in either direction. The index is sitting at 1.13 currently, and assuming a worst case scenario of +2%, I am looking at a revised interest rate of 5.13 after 5 years. Good enough for me with plenty of wiggle room in what I can afford, of course I do not pretend to know the future, but this sort of analysis is the closest I can come to in an attempt to quantify the risk I assume with a 5/5 ARM. The fact Navy does not charge lender fees upfront really opens up my options to refi in the very near future when I have about 10% equity in my future home. Home price trends have been looking good in the neighborhood we are looking in, and for these reasons I'm considering putting the extra cash I have on hand into the principal rather than points, so that my chances for a refi go up in an earlier timeframe (I am hopeful for 3 years but we'll see).

Back to the terms of the loan, they are requiring 12 months reserves, the curious thing that my lender has claimed is that we can use 100% of our retirement account values. I have never heard this on these forums, but have heard it from two other sources locally, one a lender and one a real estate agent. Interesting, we'll see if that actually pans out, but I will be saving in the meantime should that fall through, since I am just barely at the 12 month reserves mark after all closing costs are accounted for.

We had been eyeing this one home that seemed perfect for the last month or so, but the price was sitting just out of our reach at $1.2M. A few days ago they lowered the price to $1.1M, and a house down the street sold for $1M 4 months ago, so we figured we might have a chance at offering $1M. Offer rejected within 2 hours! Lady would not budge, said she was willing to sit on the home as long as it took to get $1.1M no less. I did a bit of digging and discovered it was owned by a family trust. That may have something to do with why she is in no rush to sell, but for us that means we'll be moving on. No other homes in our price range in the neighborhood yet so we'll be keeping our fingers crossed each day.

Re: Lending Options for Jumbo Loan with 5% down

youdontkillmoney — Thu, 06 Oct 2016 19:42:32 GMT

Hope it works out for you.

Is it possible for your lender to have their underwriters look at it and get a more stringent approval so there are less surprises down the road when you are actually under contract for a home.

In my case the undewriters rejected it, but my lender fough that decision and the underwriter's boss's boss okayed it.

So if my lender did not have the foresight to do underwriting even before we found a house to be under contract with, I would have been very stressed in the middle of being under contract.

It's good to get a firmer approval from underwriting "human eyes." It will make the proces late ron go faster/smoother.

Re: Lending Options for Jumbo Loan with 5% down

Anonymous — Thu, 06 Oct 2016 19:55:45 GMT

Hi there youdontkillmoney,

Yes I plan on doing exactly that, mainly from reading your incredibly detailed mortgage journey thread. Thanks a ton for that! I did not realize how much of a disconnect there was between lenders and underwriters until recently, boggles my mind.

Re: Lending Options for Jumbo Loan with 5% down

Anonymous — Sat, 01 Apr 2017 17:17:11 GMT

@youdontkillmoney et al. it is worth noting that not only doctors, lawyers or certain professionals can get 5% down loans to $900k, anybody with a credit score over 720 and low debt to income ratios (< 38, some prefer 36 ) can qualify for a jumbo mortgage. The catch is, unlike the doctor's mortgage, you'll need about 9-12 months of the proposed mortgage payment in savings. (including property taxes and insurance).

I believe more than a few places offer a 5% down loan now (http://www.ijumboloan.com/purchase/5-percent-down) up to $1.5 million. It has become more prevalent the last year or so. And the real eyebrow raiser is th PoppyLoan, from a credit union in San Franciso (https://www.sanfranciscofcu.com/poppyloan) . I remember last year, they were offering zero down up to $2,500,000, As far as rates Chase and Wells tend to have the best out there but a few other players are very competitive too with 20% down.

I know what you're thinking. Deja vu' with the housing crisis all over again. I think the difference is borrowers need to show proof of 1 years' worth of the mortgage payment and low debt. No more 2-3 months of P.I.T.I qualfying like a decade ago. However, it did not stop the cream of the crop borrowers from defaulting during the housing crash.

Re: Lending Options for Jumbo Loan with 5% down

Anonymous — Wed, 29 Nov 2017 16:58:10 GMT

Jumbo Loans have definitely changed over the years. The most common Jumbo loan programs allow for 10% down on a 80/10/10 loan. These loans will have no MIP associated due to the 80% down main loan and still allow for only 10% down giving you a great interest rate on the 80% portion and interest only payments on the 10% portion. I am a senior loan officer licensed in all states. Send me a message with any questions you might have.