We are often asked if there are Jumbo mortgages for first-time buyers? The short answer is yes, there are flexible loan options today available up to 95% financing. It’s not uncommon for first-time homeowners purchasing in high-cost locations ( Chicago, Boston, Miami, New York, Florida & California) require larger loan amounts due to higher housing and cost of living.
First time homeowners will need to provide essentially the same things as any regular “move up” buyer. The most important requirements are outlined below. Be sure to contact us 7 days a week at the number above with any questions!
- Borrowers will be required to document a 2-year employment history. If self-employed (1099) two years of tax returns will be required.
- Only owner-occupied and second homes are permitted (no investment properties)
- Approved property types include regular SF homes, condos and townhomes.
- Credit scores above 700 required for all applicants.
- Applicants will need to have mortgage payment “reserves” leftover after the required down payment and closing costs are paid. The exact amount (2-12 months) will depend on the home location, loan amount, credit profile among other variables. Retirement accounts that are not liquid will meet this requirement.
- Gift funds from family, etc are permitted for down payment and closing costs.
- Buyers should have a minimum of 5% down payment for financing up to $2,000,000 loans
- Buyers with 10% down payment will have options near $3.0M.
- Mortgage terms available include all traditional 30 & 15-year fix rate programs, and adjustable rate 3-1, 5-1, 7-1 ARM’s.
Benefits For First Time Buyers Include:
Home Financing Becoming Easier
Home loan approval is becoming much easier as the housing market continues to recover. The average down payment on a house is now averaging 15% on the purchase price. Additionally, there are new programs that enable first-time buyers to purchase with much less cash investment.
Buying Is Often Cheaper Than Renting
Most stats show that buying a home is turning out to be more affordable than renting. If you consider how much buyers spend monthly, you will have a better understanding of why purchasing is often the more beneficial option. Homebuyers spend about 25% of their income making home mortgage payments; while renters, spend nearly 35% monthly. Loan programs like the 95% Jumbo loan eliminate the requirement of large down payments so first time buyers qualify more easily without the large down payment typically needed for traditional lender-bank programs.
Mortgage Rates Are Still Low!
Mortgage rates are still near all-time low levels and the cost to borrow money remains cheap. This remains one of the primary driving factors when determining buying vs renting and provides first-time buyers a compelling reason to consider taking the step to homeownership.
Higher Home Values
The great news for first-time buyers is that the latest home price indexes show that home prices have recently been on the “up and up” It’s a good time to buy. Some hot markets in CA, Fla, etc are even seeing record high prices again due to low inventory. Additionally, brand new inventory is being added daily as new home builder confidence increases.
It’s smart to also take time and do your research before making the decision to buy real estate. Also, if you plan to finance your home, your monthly payments (with taxes and insurance) should be lower than 35% of your monthly income. Also, remember to choose a location that is good enough to attract potential buyers in the future. While the values of property do appreciate, it usually happens over a number of years. Most of the expert agree that over the long run home ownership continues to be a good investment and tax deduction for all.
Be sure to read more about the other first time home buyer options here. Please contact above with questions.