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How To Finance a 2 Million Dollar Loan with Only 5% Down

When you work with a dedicated, experienced lender like San Diego Purchase Loans, you give yourself the best possible chance at a quality mortgage for your specific needs. For example, you can work with us to secure up to 95% financing on a loan up to $2 million.

That’s right, you can get a loan up to $2 million, and all you’ll need is a 5% down payment!

Get 95% Financing for a 2 Million Dollar Loan

While $2 million may seem like a ridiculously large number to some people, here in San Diego, as well as other part of California, $2 million if far from the most expensive home in the region. In fact, this could practically be considered a fairly moderate home; certainly nice, but not extravagant.

However, many loan programs simply won’t provide financing for this amount unless there is a serious down payment. That means you’ll have to bring hundreds of thousands of dollars to the negotiating table. For example, if you are looking at a home with a purchase price of $2 million and the lender requires a 15% down payment, you’re looking at $300,000! You might earn a sizable income, but having to generate that type of cash might mean taking money out of retirement and investment accounts, which could harm your financial future.

With this program, however, you’ll only need to bring a 5% down payment. This means a down payment of $100,000 in financing on a home worth $2 million, which is far less than you might have to bring compared to other programs. Yes, it’s still a six-figure number, but it’s far more accessible than down payments of 10% or 15%. This opens financing to many buyers in San Diego and the surrounding area, and could be the difference in your home search.

Note: Financing Can Help Buy Homes Over $2 Million
It should be noted that these numbers are for a purchase with a loan up to $2 million plus the 5% down payment, which means you can buy a property for more than $2 million; you simply can’t borrow more than $2 million.

Reserve Requirements

To be eligible for this program, you will have to prove that you have at least nine months of financial reserves. As we’ve discussed before, lenders are looking to reduce risk as much as possible. This means looking at numerous factors and doing everything they can to ensure the borrower can repay the loan. In some cases, this means verifying that the borrower has enough money on hand to support the loan for a specific amount of time, which in this case is nine months. When lenders say they need “reserves,” it simply means cash that is readily available when you need it.

$2 million in financing for luxury home
With $2 million in financing, you can purchase an amazing home!

In most cases, borrowers won’t need to prove financial reserves, especially if they are borrowing to purchase a primary home using a conventional loan. However, if the loan is for a second home, vacation house, or investment property, lenders may require reserves; they’ll also require them for large loans.

Essentially, any liquid asset that can quickly be converted into cash can be counted as reserves. This not only includes money in the bank, it also includes stock portfolios, mutual funds, retirement accounts, and even cash values of insurance policies.

100% Gift Funds Are Permitted

If you are considering large loan but aren’t sure if you’ll have enough money for a down payment, you should remember that with this program, you can fund the down payment using gift funds. In fact, the gift fund can represent 100% of the down payment, meaning you won’t have to bring nearly as much money to the table.

This can significantly free your expenses by allowing for gifts from friends or family members who want to help in your purchase. However, you will likely need to provide a gift letter from the donor. This gift letter should include a lot of information, including a statement that the money is officially a gift and not a loan, which means it won’t need to be repaid.

There is, however, a slight contingent on allowing gift funds…

Gifts Ineligible for Loans with LTVs of 90% or Greater

Unfortunately, if you use a gift fund, you will have to keep the amount of money that you borrow much lower, which can restrict the financing options for this program. Essentially, if you borrow 90% of the property value or more, you will not be able to use gift funds for the loan and will have to fund the down payment and other expenses yourself. This is another measure that is used to reduce risk to lenders.

Gift Funds Can be Used for Many Different Purposes

One of the best features for this program is that you can use gift funds for a wide range of purposes. The most obvious, and usually the one with the highest price tag, is your down payment. As we’ve already discussed, your down payment can be hundreds of thousands of dollars, and even if you’re not purchasing a home that needs a two-million-dollar loan, the down payment can be extremely difficult to generate. The program, fortunately, allows you to use gift funds for a down payment. (Assuming, of course, you meet the standards discussed above.)

You can also use your gift funds for closing costs. These are fees that are associated with the purchase of a home and are paid at the final closing of the deal. “Closing” is the point when the title of the property is transferred to the new owner. They can include the application fee, appraisal, attorney fees, credit checks, insurance costs, and more.

Also, the gift funds can be used for reserves, which will bolster your eligibility for the loan.

You Can Have a 95% LTV Loan Up to $2 Million with San Diego Purchase Loans

If you want to purchase a top-quality home using a loan up to $2 million, contact the experienced team at San Diego Purchase Loans. These large loans require the expertise of a team like ours, so call us today and let us help you find the right mortgage for your specific needs.


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Chad Baker, CrossCountry Mortgage   
NMLS# 329451 | CCM NMLS# 3029