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How To (& Why) Buy a $1.1MM Home With Only $39,000 Out of Pocket

Marketing Rate Buydowns: This is a quick reminder that we love to help listing agents market temporary interest rate buydowns with their listings.

We are still seeing agents offer buydowns as very enticing incentives with tremendous success. Please reach out if you’d like more info.

How To Easily Buy A $1.1 Million Home With Only $39,00

Now that the FHA loan limit is $1,089,300 – any buyer** with enough income can buy a $1.1 million home with only $38,500 (3.5% down) out of pocket (in “high-cost” areas like coastal California).

**Quick Reminder: Anyone can use FHA financing, as it is NOT just for first-time homebuyers.

The reason buyers only need $38,500 is that they can easily get a lender credit to cover closing costs when the loan amount is so large.

Conforming (Fannie/Freddie) Only Requires $55,000 Or 5% Down

Fannie and Freddie only require 5% down for a $1.1 million purchase – with no income limits.

So that may be a better option for buyers who have the extra cash, as they can avoid the 1.75% Upfront FHA MIP fee.

FHA Limits In Texas And Central California: Much Lower & Varied!

FHA loan limits in Texas and central CA are as low as $472,030 and they vary tremendously – so agents and buyers alike should always inquire about FHA loan limits as they move from county to county to look for homes (or use our loan limit checker tool).

CONFORMING LOAN LIMIT IN TEXAS IS $726,200 – so anyone can buy a $764,000 home with only 5% ($38,200) down.

Who Would Put So Little Down For Such An Expensive Home?

  1. Wealthy investment banker who plans to gut the entire house right after the purchase, and then refinance in 6 months.
  2. Tech worker who has little cash and $300,000 income – with an IPO around the corner.
  3. Doctor with $400,000 of income, a ton of student loans, and very little cash.
  4. Equity investor who needs to preserve his cash for other investment opportunities.
  5. Wealthy buyer who does not want to liquidate assets in a down market.

The above are all examples of well-off borrowers we have helped with low down payment purchases over the years.

Jay Voorhees
Founder | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167