Milwaukee Jumbo Home Financing Options: Over the years, jumbo financing options have evolved and grown far beyond the standard 20% minimum down payment required in the past. While most every jumbo loan program asks for at least 20 percent down, there are other options allowing you to keep more of your money in your pocket and less in the form of a down payment. In fact, many qualified home buyers in Wisconsin now have many low down payment Jumbo loan programs available.
Jumbo loans will typically ask for a credit score of 700 but will go slightly less with larger down payment. For those wanting to get the absolute lowest rate available, they can expect to have at least a 20 percent down payment and an even better one with 30 percent down. However, real estate isn’t the most liquid of assets and more borrowers are seeking to leverage low mortgage rates and lock these rates in for the term of the loan. Borrowers will also need to be prepared to document income – at least two years of employment history with income verified with W2 forms and pay check stubs or in the instance of self-employed borrowers, two years of federal income tax returns. Funds needed for a down payment are verified reviewing bank and investments statements from the borrowers.
For those who want to put less than 20 percent down, there are programs available up to 90% and even 95%. With a 10 percent down payment option, there are a few basic options- one single mortgage or a combo 80-10-10 loan. Most mortgage programs today require mortgage insurance when the mortgage is more than 80 percent of the value of the property financed. However, home buyers in select states can now take advantage of a single loan option with no PMI. Additionally, borrowers can also opt for a combo loan option with two mortgages, one representing 80 percent of the sales price and one at 10 percent. This is the 80-10-10 program. This structure also avoids mortgage insurance because the first mortgage is at 80 percent of the value utilizing a second mortgage to make up the difference between 10 percent down and the first mortgage amount.
Another recent entry in the jumbo financing market that can be used to finance a property in higher costs locations in WI like Milwaukee and Madison is an 80-15-5. Like the previous 90% option, there are two loans instead of just one. The difference is the second mortgage represents 15 percent of the sales price and 5 percent down instead of 10. Again, this might appear to be the best choice for those wanting to finance a jumbo home with the lowest amount down but the tradeoff is the difference in interest rates between the two programs. Overall, the 80-10-10 will have slightly lower rates on both loans compared to the 80-15-5.
So what option is better, the single loan or combo 1st and 2nd mortgage option? It really depends on a variety of factors like the borrower’s credit profile, property type, state, etc. A trained loan specialist will compare each option to help you better determine the option that makes the most financial sense. Home buyers can learn more about the 95% Jumbo options in the video below:
A few important things to note:
- All the jumbo loan options come with a fix rate or adjustable rate term option.
- The 95% max financing only applies to a primary residence or second home.
- Buyers will need to document income and assets.
- These options also apply to homeowners that want to refinance. Learn more about Jumbo Refinance here.
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