5% Down Jumbo Loan California: Jumbo loans are defined as mortgages that exceed the standard conforming loan limits. The 2020 Conforming Loan Limit is currently $510,400 in most locations except for some higher-cost locations in California, where the limits can be just over $765,600. Jumbo loans typically require a larger down payment than conventional loans as they pose more risk to the lenders and banks that originate them.
Lenders often have tighter requirements on jumbo loans because of the incurred risk of lending out more money on a single property and borrower. Additionally, Jumbo loans are typically harder for lenders to resell on the secondary markets making them less attractive for many mortgage lenders.
While buyers can likely find mortgage lenders to offer a conventional mortgage with less than 20% down payment, jumbo loans with less than 20% down are harder to find. However, that’s all starting to change thanks to recent guideline changes in the jumbo markets. A select few mortgage companies are now offering jumbo financing up to 95 percent loan to value – only 5% down payment. This low down payment option is especially good for buyers in higher costs locations like San Francisco, Los Angeles, San Diego, San Jose, Sacramento, etc
Basic California jumbo program requirements and loan limits:
- The 95% Jumbo financing option only applies to owner-occupied single family homes, townhomes and condos. Second homes are also permitted with a 5% down payment. Vacant land and lot loans are not permitted. Building on your own site is permitted through special Jumbo construction loans.
- Applicants must be able to document all income and assets necessary for loan approval. Pay stubs, tax returns, etc
- Standard debt to income limits similar to conventional loans apply. The limit for total expense + housing is generally 45%
- Credit score of 700 or better is required to be approved for the 5% down jumbo option. Home buyers with lower credit scores down to 660 have options with a greater down payment
- Must be a U.S citizen
- Home buyers must occupy the home within 30 days of the closing
- Buyers will need reserves – this is savings after the down payment and closing costs. Reserve standards can be met by retirements accounts – see below
Jumbo Loan Amount Limits:
- 95% Jumbo – loan limit cap $2,000,000 – 3-9 months payment reserves required
- 90% Jumbo – loan limit cap $3,000,000 – 9 months payment reserves required
- 85% Jumbo – loan limit cap $3,500,000 – 24 months payment reserves required
Jumbo Loan Benefits:
- No mortgage insurance PMI options – single loan and combo “piggyback” loan options
- 30 year fix rate, 15 year or adjustable rate options
- No early payoff penalty
- Flexible jumbo refinance options available for both interest rate reductions and cash out refi.
Learn more about California jumbo loan options here. Serving home buyers nationally including CA: Los Angeles, Orange County, San Diego, San Jose, San Francisco, Fresno, Sacramento, Oakland, Bakersfield, Anaheim, Riverside, Stockton, Irvine, Fremont
Homebuyers that have questions can learn more by calling Ph: 800-962-0677 or visiting www.JumboMortgageSource.com