Areas in California represent some of the highest median home values in the continental United States, primarily in the cities of San Francisco, Los Angeles, and San Diego. However, in Oakland, the median home values are also on the higher end compared to the national prices.
The median home value in Oakland, CA is approximately $750,000. The current conforming loan limit for Oakland – Alameda County is right at $1,209,750. Since the median home value is close to the conforming loan limit, jumbo financing is often needed for buyers purchasing a more expensive property.
The Oakland housing market has been strong for the past few years, and recent data shows that homes in Oakland are holding value better than any other region in the Bay Area.
When shopping for jumbo loans to finance higher-priced homes in Oakland, most mortgage companies offer loan programs that require 20 percent down payment. Financing a home selling for $2 million would mean a down payment of $400,000 and a loan amount of $1.6m. Some banks even ask for a greater down payment, especially when the loan amount exceeds $2 million. When financing jumbo homes and borrowers do not wish to make such a large down payment, there are other options that are very competitive.
The jumbo mortgage options that require the lowest down payment are offered in either a single 95% loan or a dual combo loan option. With a down payment of 5% on a $2 million dollar home, the down payment amount is just $100,000 resulting in a single jumbo loan of $1.9m. The dual loan option, sometimes referred to as a “piggyback” program also asks for just 5% down, yet there are two loans instead of just one.
Mortgage lenders also refer to the program as an 80-15-5. Again with a 5.0% down payment, there is a first mortgage at 80 percent of the sales price and a second lien which makes up the difference between the down payment and the first lien.
The interest rate on the second lien is typically higher than the rate on the first lien. With the single loan option, the interest rate is higher than the first lien with the 80-15-5 structure.
When adding up the total monthly payments on both loans, the monthly payments will be very similar to one another and each has its own advantages. You’ll want to spend some time with your loan officer to determine which option is better for you and why.
But don’t think that just because your bank only offers a jumbo loan that requires a 20 percent down payment, there are no other choices. For well-qualified buyers, there are options up to 95% financing available throughout California.
Keep in mind the loan amount limit cap for 95% is $2,000,000. However, approved borrowers with 10% or more down payment can finance up to $3.0mil. Read all the basic Jumbo guidelines here. Please also call us above with questions, or submit the Request Contact Form on this page to speak with a loan specialist today.
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