Break the Homebuying Logjam with 100% Jumbo Financing
For San Diego homebuyers, 100% jumbo financing creates a renewed chance to purchase a world-class home in our first-rate city!
100% Jumbo Financing: What it Means for San Diego Homebuyers
Most loans across the country, even if they are not supported by the federal government in any capacity, are conforming loans. Essentially, conforming loans are small enough that they are within the maximum lending amount allowed by the FHFA. Conforming loans, because they often come with government support, can have lower interest rates requirements or easier downpayment standards.
Jumbo loans, however, are above the maximum limit allowed by the FHFA. They are outside of the standards set by this organization, so they often come with tighter qualification standards, including downpayment requirements that place them out of reach for many buyers. But in today’s market (especially places like San Diego), there are options that can be particularly effective, including 100% jumbo financing.
Why Jumbo Financing in San Diego?
In places like San Diego, jumbo loans, as opposed to conforming loans, can be particularly attractive. Conforming loans need to be less than the maximum loan amounts set by the FHFA, which calculates minimum loan amount on a county-by-county basis. Most counties are at the base limit, which is currently $548,250. In most areas, and for most buyers, this is enough to purchase a wonderful home. (This limit is simply the most that can be loaned; buyers still need to qualify and many will qualify for less.)
But in high-cost areas, the loan limits are increased. Metro areas like New York City, Denver, Seattle, and Los Angeles (just to name a few) all have higher limits for what qualifies as a “conforming loan.” San Diego also has higher limits.
In San Diego County, the conforming loan limit for a single-family home is $753,250. Of course, this seems like a large number, but if you’ve ever shopped for homes in the area, you know that there are plenty of properties well above this number.
Currently, the median home price for properties in San Diego is around $790,000. There are a variety of sources that will bring different numbers, but just as an example, the median sale price for San Diego homes according to Redfin was $800,000 when this article was written. That means that over half of the homes being sold in San Diego are beyond the conforming limits.
In a “normal” market, homes will usually sell for less than the listed price. A home listed for $600,000 might go for roughly $590,000. (Give or take, of course.) But in today’s market, homes are typically selling for more than the listed price. In fact, the sale-to-list-price has been about 102%! This means that sellers are getting the listed price or higher for their home. This is a trend rarely seen in real estate.
There are plenty of numbers, figures, percentages, and ratios we could cite, but the lesson is simple: homes in San Diego are expensive.
Fortunately, there are jumbo loans available for your purchase. To make this even more intriguing, these loans can be used with 100% financing, which means no downpayment is required.
Using our 100% Jumbo Financing Program
Our 100% jumbo financing is a wonderful option for anyone who needs to purchase a home in San Diego. They may not be for everyone, but if you qualify, these loans could be an excellent choice for purchasing your property.
One of the main requirements for this loan is that you need a 750 FICO score. 750 is a high score, but it’s not in the highest of all credit groups. According to Experian, one of the major credit bureaus, a 750 FICO score would qualify as “very good,” but not “exceptional.” So while you need a strong score, it doesn’t have to be the best.
Up to $1.25 Million in Financing
These no-downpayment loans are available for up to $1.25 million. However, the primary wage earner needs at least a FICO score in the middle 700’s to qualify for this amount.
4.5% Minimum “Floor Rate”
On a 30-year mortgage, these loans come with a 4.5% “floor rate.” After the first five years, this rate is subject to a rate adjustment. The second mortgage, which is fully amortized after 15 years, has a floor of 9.99%.
100% Jumbo Financing: An Example
Let’s look at how this loan would play out in a simplified example. Suppose you are purchasing a home for exactly $1.25 million.
First, you take out a loan for $1 million. The rate for the first $1 million is 4.5%, and it has an initial principal and interest payment, which should be around $5,000 to $5,100.
The second loan is for $250,000, which will allow you to complete the purchase of $1.25 million. This is a 15-year mortgage with a rate of 9.99%, and it would have a payment of roughly $2,500 to $2,800, depending on the details.
As you can see, this creates the opportunity to purchase a world-class home in San Diego, a home that may not be an option if you are going with a conforming loan. It also allows you to purchase a higher-end home without using a large downpayment, which can go well beyond $100,000 in many situations.
The Jumbo Financing You Need is Available in San Diego and Beyond
San Diego is a unique city in many ways. But as a red-hot market, it’s actually fairly typical. Hundreds of metro areas across the country are experiencing rapid growth in home prices, extremely fast sales, and homes going for well above the asking price. These factors may be more pronounced in San Diego (and less pronounced than others), but these issues are impacting buyers in our city, as well as all of California and across the United States.
For this reason, 100% jumbo financing may be an ideal solution for homebuyers in any state.
We are proud to serve the San Diego area, but we also provide financing in numerous states. Contact our team today to learn more and to see if we can provide the jumbo loan you need for an outstanding purchase.