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Jumbo Mortgage Loan Downpayment Requirements

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Down payment and reserve requirements for jumbo mortgage loans

Down payment requirements for jumbo mortgage and super-jumbo mortgage loans have gone way up in the last 24 months. For 2009, a jumbo loan borrower will need to make down payments on purchase loans of at least 20% unless your loan amount is below Fannie Mae, Freddie Mac or FHA jumbo loan limits.

If you are lucky enough to fall into the Conforming High Balance loan limit for your area, then there are fixed rate loan program options available through Fannie Mae, Freddie Mac and even FHA.

The FHA jumbo loan program for 2009 has temporary loan limits in place for high-cost areas that range from $417,000 to a maximum of $625,500 depending on the county where the property is located. Home buyers purchasing a property located in one of these areas can use the FHA program which still only requires a 3.5% down payment and allows closing costs to be financed. While there is mortgage insurance required for down payments of less than 20%, the mortgage insurance for FHA loans is much less than the cost of private mortgage insurance.

The next level of jumbo loan financing includes the expanded Fannie Mae and Freddie Mac high balance conforming jumbo loan programs. The maximum limits for these programs range from $417,000 up to a maximum jumbo loan limit of $729,750 again depending on the county where the property is located. Under these programs, borrowers can obtain 30 year fixed rate jumbo mortgage loans with interest rates about one half percent higher than conforming loans with a down payment as low as 10%. The only problem with this program is that the monthly mortgage insurance premiums from private mortgage insurance companies have gone up and are expensive.

For borrowers who need a loan greater than the jumbo loan limits for Fannie Mae, Freddie Mac and FHA, the loan programs of select portfolio lenders are the best option right now. The only problem is that the down payment requirements are substantially higher. For example, the purchase loan down payment requirements right now are as follows for loans over $750,000:

Minimum downpayment required for Jumbo Mortgage Loan

Maximum Loan Amount	Down Payment Required
$1,000,000	25%
$1,500,000	30%
$2,500,000	40%
$3,000,000	50%

For refinancing home owners, maximum loan-to-value limits have also been pushed way down: Rate and term refinances usually require about 5% more equity than for purchasing. Nearly every jumbo mortgage lender has limited the maximum loan-to-value on cash out refinances to about 65% up to $1,000,000 and 50% for any loan amount over that.

Borrowers seeking an interest only loan may see their down payment/equity requirements go up by 5%. Properties such as condominiums may also increase down payment/equity requirements.

In addition, reserve requirements have also increased substantially for many of the super-jumbo loan programs where loan amounts are greater than $729,750. A reserve requirement is the amount of liquid assets (checking, savings, stock and bonds) that a borrower has left after they have purchased their home with their down payment and paid all closing costs. For Fannie Mae/Freddie Mac jumbo loans, the reserves required are six months of the monthly principal, interest, taxes and insurance payments. So for example, if the monthly payment will be $6,000 per month then $36,000 in reserves is needed to qualify for the loan.

While down payment and reserve requirements have become much higher in the past 24 months, the good news is that for those borrowers who do qualify rates are the best they have ever been. Jumbo adjustable rate mortgages (LINK TO 6-c-i: Which type of Jumbo ARM is best?) are at their lowest levels ever.

For immediate help with you jumbo loan financing needs, submit your loan help request here

Finding the lowest Jumbo Mortgage Rates

Finding the right mortgage loan is just as important as finding the right home. With so much at stake, it's important to get expert advice from a company that you can trust. Total Mortgage has a team of dedicated mortgage experts that manage jumbo mortgage loans. We are committed to finding the right jumbo mortgage loan, at the lowest possible jumbo mortgage rate, while keeping you informed every step of the way. If you'd like to talk to one of our jumbo mortgage loan experts, call 877-868-2503.

Other relevent articles:
  » Jumbo Mortgage Programs: Options and getting the right advice

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If you have any questions that you would like to get answered by our expert mortgage brokers, please email us or call us at 1-877-868-2503.

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