Case Study #7 – Jumbo Loan Without 20% Down

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The Client

Our client came to us wanting to purchase a luxury property.

  • Loan Type – Purchase
  • Program – Conventional 80/10/10
  • Sales Price – $875,000
  • Rate – 3.25%
  • Required Down Payment – 10% ($87,500)
  • Payment – $3,794

Client Requirement

The client was looking to purchase a luxury home above the conventional loan limit of $510,400 and preferred to not put down the required 20% down payment. He also requested that his payment be as affordable as possible so he could purchase more home and still be under budget. He wanted his total monthly mortgage payment to be below $4,000 including all costs. Flexible guidelines were also a must since he is a business owner and needed to work with an underwriter that understands how business cashflow can change each year. 

Loan Challenges

The main challenge here was finding a flexible program that would allow us to approve the borrower for a jumbo loan without putting down the required 20% ($175,000) down payment. In addition, we needed to partner with a lender that specialize in combo loans (80/10/10) so the loan would get fully approved and ultimately close.

The Challenges

  • Find a program that would allow the client to be approved for a jumbo loan without having to put down 20%.
  • Find a lender that specialized in 80/10/10 loans so we could get our client fully approved.

Our Solution

We were able to secure 90% financing through the 80/10/10 conventional program. Essentially, it’s a 1st mortgage at $510,400 and a 2nd mortgage at $277,100 with a down payment of just 10% ($87,500). This loan structure avoids the loan being considered a “jumbo loan”, so the guidelines are more flexible and the terms, including the rate, are more favorable. This is because lenders consider this a lower risk loan. This also allows us to avoid mortgage insurance since the deal is broken up into two separate loans. No mortgage insurance makes the loan even more affordable. After careful research and shopping the loan with our 26 lenders and banks, we found a competitive rate on both mortgages. Having so many lender options allowed us to find the right one that specializes in this particular program. This kept his overall payment low and within his budget to be able to move forward.  

The Results

Our client was able to purchase a high end luxury property with only 10% down. Because of the beneficial nature of the loan program the payment was kept low and well within his budget.

  • Client purchased a luxury home on the high end of his budget and secure an affordable mortgage payment to meet his budget. 
  • We were able to secure 90% financing on a jumbo loan by breaking the loan into a 1st and 2nd mortgage. 
  • He sold his house and purchase his new property on the same day to make the process streamlined. 
  • We closed in 26 days from contract date