Are you looking to purchase a home above the conforming loan limit ($647,200 in 2022)? If so, we've got some great news! A new loan program was just released that can be used to purchase your dream home with only 3.5% down, which allows you to keep more of your cash at closing.
Conforming Loan Limits
Each year home prices throughout the United States are analyzed and averaged to determine the conventional conforming loan limit for that year. Some years it increases and some years it remains constant, all dependent on current home values. Counties where 115% of the local median home values exceed the baseline conforming loan limit are given a slightly higher conforming loan limit. The maximum for any area in the US is set at 150% of that years loan limit. More information and historical data on conventional conforming loan limits for prior years can be found in our previous blogs (2022 & 2021).
Jumbo Loans
Home purchases over the conventional conforming loan limit require a jumbo loan. Jumbo loans are very similar to conventional loans but can have a few more requirements for approval or need additional information during the loan process. Jumbo loans have loan terms of 15 or 30 years and potentially other options depending on the specific lender or loan program.
Down Payments & Loan to Value (LTV)
In the mortgage world, maximum loan amounts for a property are determined based on what percentage of the property value is mortgaged. This is called the Loan to Value (LTV) and is calculated by dividing loan amount by the property's value. The remaining percent must be in the form of a down payment or equity in the home To determine the current market value of a property, an appraisal is generally required. LTV and down payment are complimentary figures. For example, conventional loans with no PMI (private mortgage insurance) usually require 20% down to reach an 80% LTV.
New! Jumbo Loans with 3.5% Down Payment
This week a new jumbo loan option has become available! The new loan program allows for a maximum LTV of 96.5%, on loan amounts up to $1.5M. A qualified buyer would only need to put 3.5% down, which equates to $54,390 down on a $1,554,000 primary home purchase. This jumbo loan product can be used on a primary home purchase or primary home refinance (rate & term) and is an excellent option if you want to minimize cash down. This program differs slightly for condominiums as they have a max LTV of 85%, up to $1.5M.
In addition to this new program, there are a variety of other jumbo loan programs for purchases and refinances. Loan sizes can go up to $2.5M and beyond. These products can be used for primary, secondary, refinance, and cash out refinance. LTV, down payment, and other qualifications vary but they are excellent financial products to help you achieve your real estate goals.
Looking for more home mortgage options?
Whether this is the perfect loan product for you or you are looking for something different - larger loan amounts, conforming conventional, VA, FHA, primary, secondary or investment - Simplicity Mortgage specializes in finding the loan that best fits your specific scenario.
Call us today to discuss your next purchase or refinance!
