A great new jumbo loan product offers 90% financing on purchase prices as high as $972,775. Qualified borrowers with limited down payment funds are now able to support significantly higher purchase prices. Until recently, buyers with 10% down payment funds buying in this range were relegated to FHA loans, which top out at $729,750 and limit purchase prices to just $810,833. This new loan not only increases purchase power by over $160,000, but also carries lower closing costs and mortgage insurance premiums, and does not mandate impounds for monthly collection of property taxes and hazard insurance.
The program's maximum loan amount ranges county-by-county and is calculated by adding $250,000 to a given county's conforming high balance limit, as set annually by the Federal Housing Finance Agency. The sum total is then divided against 90% to determine the purchase price. Most of the Bay Area's counties have the highest conforming limit of $625,500 for single family residences, where the loan program supports purchase prices of $972,775. In Sonoma County, where the limit is capped at $520,950, the maximum price at 90% financing is held to $856,611.
There is no upfront mortgage insurance premium, which on FHA loans has just increased to 1.75% of the loan amount. The annual mortgage insurance premium is just .68%, which is considerably lower than the FHA's current figure of 1.20%, which will soon increase to 1.45%. And borrowers are also not obligated to set-up an impound account for monthly collection of their property taxes and hazard insurance.
Qualifying for this special 90% financing program is more stringent than with FHA insured loans. Borrowers need a 760 mid Fico score (FHA requires just 620) and also need reserve funds after all down payment and closing costs have been met. Required reserves range from between 6 and 12 months PITI, depending on debt ratios. But for borrowers with strong credentials whose only limitation is down payment funds, this loan program offers perhaps their best financing option.