San Diego is a wonderful city; a great place to live. But, quite frankly, it’s expensive. Houses in particular can be high cost. For this reason, many turn to jumbo loans in San Diego to make their home purchase.
We are proud to offer financing up to $1.75 million with only a 3.5% downpayment!
Proudly Offering Jumbo Loans in San Diego, California with Only 3.5% Down
Up to $1.75 Million in Financing!
The defining factor for a jumbo loan is the total amount. All other details aside, if a loan is larger than the conforming limits in that county, it is classified as a jumbo loan. With our jumbo loans in San Diego, you can secure financing up to $1.75 million. If you add that total to a downpayment, you could purchase one of the finest houses in San Diego and the surrounding area.
Just how useful can these loans be? When you look at the available properties in our area, you’ll see that many homes, unless you are purchasing with a massive downpayment (or entirely with your own cash) require a jumbo loan.
In San Diego County, the limit for a single-family home is $879,750. There are limits for multi-unit properties (up to four units) but for the sake of simplicity we will, for now, stick to single-family only.
A search of realtor.com for single-family homes, condos, and townhouses in San Diego County shows a total (at the time of this writing) of 4,290 listings. This includes all price ranges.
But what if we eliminate all homes priced under $1 million? In this search, we still see 1,288 homes on our search. This means that roughly 30% of the homes (single-family, condos, and townhouses) listed in San Diego County are over $1 million in asking price.
At a minimum price of $1.5 million, there are still 710 properties, good for roughly 16% of all listings.
While it is possible to purchase these high-end properties with a conforming loan, you’ll need a large downpayment to make it happen. A property of $1.25 million, for example, could, in theory, be purchased with a loan of $879,750 (the absolute maximum conforming limit) and a downpayment of $370,250.
Many buyers, even if they have the downpayment, will prefer to use jumbo loans in San Diego.
Only 3.5% Means Much Lower Upfront Costs
A loan of this size only requires 3.5% down, which is much lower than numerous jumbo loan options. That translates into significantly reduced upfront costs if you choose to purchase with this option.
Let’s keep our example of a home purchased at $1.25 million. Suppose you used a jumbo loan product that required a downpayment of 10%. In this case, you would need to bring a check for $125,000 to make the purchase. If the loan product required 20%, which is not uncommon for jumbo loans, you would need $250,000.
At 3.5%, the loan would only require $43,750. This means massively-reduced upfront costs when you are trying to purchase a home in San Diego.
Maximum of Two Years of Reserves Required, One Year Possible
With these loans, you’ll only need two years of cash reserves, although it’s possible to secure financing with as little as one year.
A cash reserve is simply money held in savings, checking, or another liquid account. (Or near liquid, talk with our team about what qualifies.) This money is held in reserve and acts as a safety net in the event of a financial issue. If you (the borrower) were to experience a job loss or reduction in income, the cash reserve can be used to make the mortgage. A borrower with a large cash savings is less likely to miss payments, so lenders often require reserves on jumbo loans.
If you use a 3.5% downpayment, you’ll need two years (24 payment) of reserves. Suppose you have a mortgage payment of $6,000. In this case, you’ll need reserves of $144,000. ($6,000 x 24 = $144,000.) This money is not spent, so you won’t lose it; it simply needs to be in an account of some type before the loan is finalized.
If you use a larger downpayment, you can reduce the cash-reserve requirement. With a 5% downpayment, you can secure the loan with only one year (12 payments) in reserves.
Manageable DTI Requirements
These mortgages also have manageable debt-to-income requirements, although it can be higher than a typical conforming loan. For these loans, you’ll need a DTI of 40% or less. Other loans may allow for ratios up to 45% or even 50%, but with these jumbo loans it’s important that your income is not stretched too far. 40% may be lower than what is normally allowed, but it’s still a manageable ratio that allows for other debts, such as car loans and student loans, on your credit profile.
Refinance Available
If you already own a home that is valued in the millions, you could use these jumbo loans as a refinancing option. Not only could you rework your loan to get a lower rate or better terms, you could use it as a cash-out refinance option.
Homeowners with hundreds of thousands of dollars in equity could use this jumbo loan to refinance and take out the cash they need for home repairs, investments, medical bills, or any other major expense.
Multiunit Properties Eligible for 3.5% Down Jumbo Loan
Not only are these loans available for single-family homes, you could use them to purchase a multiunit property. The limit for a two-unit property in San Diego County is $964,300, while three-units have a limit of $1,165,600. A four-unit property has a conforming loan limit of $1,448,600. So if you need financing above these amounts, this jumbo loan could be a useful option. There may, however, be owner-occupant requirements, so talk with your lender about using jumbo loans in San Diego to purchase a multi-unit property.
Get the Loan You Need to Purchase Your San Diego, California Property
Want to learn more about jumbo loans in San Diego? Contact our staff today and let us help you purchase a world-class home in our first-rate city!
