“High Balance” Conforming Loan Limits are now $765,600 in “High Cost” areas, which include much of coastal California including the Bay Area.
These much higher conforming limits now allow buyers to purchase homes in the $1 million+ range with much smaller down payments – if they couple their first mortgage with a “piggyback” Home-Equity-Line-of-Credit (HELOC) 2nd Mortgage.
10.1% DOWN TO $1.24 MILLION
With a $350,000 HELOC and $765,600 first mortgage, buyers can purchase a $1.24 million home with only 10.1% down (“Combined Loan-to-Value” is 89.9%).
For buyers with excellent credit, the HELOC will only have an interest rate of Prime + 0.74% too, or 5.49%.
5% DOWN TO $1.07 MILLION
We have another HELOC provider that lends up to 95% Combined Loan-to-Value, but they cap their loan limits to $250,000.
This still allows buyers to purchase a $1.07 million home with only 5% down.
Both the 5% and the 10% down scenarios are great options for a lot of our millennial buyers who have excellent incomes but not a lot of liquid funds.
TEXAS – 5% DOWN T0 $800,000
Unfortunately, the above scenarios apply only to California. There are no “high cost” areas in Texas, so the conforming loan limit for a first mortgage never exceeds $510,400.
Texas buyers, with limited funds, who want to exceed the conforming limit while also putting less than 10% down would be limited to a purchase price of $800,000. For example, a buyer could purchase an $800,000 home with only 5% down by taking out a first lien of $510,400 and a second lien of $249,600. Fixed rates for TX second liens start at 5.25% in this scenario.
JUMBO OPTIONS FOR CALIFORNIA AND TEXAS
The above “HELOC” Scenarios are great options for borrowers with limited funds, as I mentioned a few times.
For well-qualified borrowers wanting to put less than 20% down but who also have ample liquid funds (for reserves), we have some very competitive jumbo options.
These jumbo options offer no-points rates in the mid to high 3% range with no Private Mortgage Insurance requirements!
But again, buyers need to be very well qualified with substantial liquid assets, excellent credit and very clean credit packages overall.
So, unfortunately, very few of our buyers, with limited funds, in jumbo price ranges actually qualify for our most competitive 10% down jumbo financing options.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 310167
