When it comes to home mortgages, there are a variety of options available to Columbus buyers today. One type of mortgage that has gained popularity in recent years is the Jumbo loan. Often used by those buying or refinancing a high-priced property, jumbo mortgages can offer low down payments and attractive interest rates. Long gone are the days when Jumbo loans required a minimum 20% down payment.
In this blog post, we’ll discuss the benefits of low down payment Jumbo mortgages with 10% and 5% down payment. We’ll also cover piggyback loans and ways to avoid paying costly mortgage insurance – PMI.
Current Real Estate Market Trends in Columbus:
Columbus has been a hot spot for the real estate market in recent years, with a growing population and strong job market. As of 2023, the median home price in Columbus was $285,000, up 2% from the previous year. Here are some other market trends to keep in mind:
- Inventory remains low: despite the high demand for housing, Columbus has a limited supply of homes for sale, which can make buying a home in the area competitive.
- The housing market has cooled over the last year at a more normal pace, just like most of the U.S. However, multiple offers still happen and tight inventory often leads to multiple offers on a single property. This is especially true for properties that show well in desirable neighborhoods.
- Prices are still rising: despite the cooling market, As stated above, Columbus home prices have continued to rise, with a median sale price of $285,000 as of mid-2023. This is an increase of 2% from the previous year.
2023 Conforming and FHA Loan Limits for Franklin County:
If you’re considering purchasing a high-priced property in Franklin County, Ohio, it’s essential to first understand the conforming loan and FHA loan limits for the area. The conforming loan limit for Franklin County in 2023 is $726,200, which means that loan amounts above this limit will be considered jumbo loans. Additionally, the FHA loan limit for this same area will be $488,750. Understanding these loan limits can help you determine what type of mortgage will work best for your homebuying goals and budget.
Benefits of Low Down Payment Jumbo Loans:
For homebuyers in Ohio, a Jumbo mortgage with a low down payment can be a great option. Typically, jumbo loans require a larger down payment relative to conventional mortgages, ranging from 10-20% of the home’s purchase price. However, many lenders are now offering jumbo mortgage options with lower down payment requirements, such as 10% and even 5%. Here are some of the benefits of these low-down payment options:
- Lower down payment: One of the biggest benefits of a low down payment jumbo mortgage is that it allows you to purchase a high-priced property with a smaller down payment and stay more liquid. This can be a game-changer for buyers who may not have a full 20% down payment required or just want to retain their cash for other investments.
- Better interest rates: because jumbo loans are riskier for lenders, they typically come with higher interest rates. However, some lenders may offer more attractive rates for low down payment jumbo loans when utilizing a combo loan structure (see below)
- Access to larger loans: with lower down payment requirements, homebuyers can receive larger jumbo loans and purchase more expensive properties.
- Easier qualification: a low down payment jumbo loan may make homeownership more accessible to those with limited available funds, as borrowers may have an easier time qualifying for these loans.
*Buyers can read the complete list of all 2023 Jumbo qualifying requirements here.
Piggyback Loans with No Mortgage Insurance (PMI)
One great option for buyers who want to avoid a PMI mortgage is a piggyback loan. This type of mortgage allows homebuyers to take out two separate loans instead of one large jumbo mortgage, eliminating the need for PMI. Here’s how it works:
- The first loan covers the majority of the home’s value and is considered the “primary” mortgage. The loan amount is generally limited to the max conforming loan limit.
- The second loan, also known as a “piggyback” loan, covers the remaining balance up to the purchase price of the home.
- The borrower can expect to pay higher interest rates on the second loan than the primary mortgage, but the overall mortgage payment may be lower, thanks to the more attractive conventional loan rates on the primary mortgage and the elimination of PMI payments.
Purchasing a luxury property can be an exciting experience, but it’s important to understand all of your mortgage options. Low down payment jumbo loans, and piggyback loans with no PMI, are all factors to consider when making your decision. Home buyers that have questions about purchase and refinance options can call us above, or submit the Info Request Form on this page for a quick call back.