As a first-time homebuyer, you have a lot to consider.
There are new terms, new information, and important concepts to learn. In many cases, the confusion is compounded by “advice” from friends, family, real estate agents, lenders, and more; advice that, however heartfelt is sometimes wrong and often contradictory.
First-time home buyers also have to deal with challenges that rarely bother other buyers. From the lack of a large down payment to difficulty finding a properly-sized home, first-time homebuyers have a lot to handle. Fortunately, there are some programs that make life a little easier.
Our minimum-down-payment jumbo loans, for example, seems tailor-made for first-time homebuyers who want to purchase a large or luxurious house. With features that make it more accessible to buyers at all phases of life, this may be the program you need for financing your first home.
Our Minimum-Down-Payment Program is Great for First-Time Homebuyers: Here Are 7 Reason Why
Low Down Payment Requirements
It’s the most obvious benefit for first-time homebuyers. If you have recently graduated college, gotten married, or had children, you likely haven’t had time to save for a large down payment, which is usually required for mortgage loans, especially for large purchases. While other borrowers have had time to build savings and equity that can be used as a down payment, first-time buyers rarely have that luxury.
With this program, however, you can use a down payment as small as 5% with a loan total of $2 million. Yes, 5% of $2 million is a lot ($100,000), but this represents a much smaller amount compared to the 20% you may be required to bring with other loans.
Lenient Reserve Requirements
In addition to the low down-payment requirements, this program also has excellent terms for reserve requirements. Reserves are simply funds held by the borrower that can be used to pay the mortgage in case of financial emergency. In large loans, such as jumbo loans, lenders often require cash reserves of a year or more; it’s not uncommon for requirements to reach 24 months.
With this program, however, you will be able to make the purchase with only nine months of cash reserves on a loan balance up to $3 million. This significantly reduces the entry point for the loans, making them more accessible to first-time buyers.
Higher Loan-to-Value Ratio Allowed
Because the down-payment requirements are low, the LTV allowed for the purchase is high. Most first-time home buyers are limited to 80% LTV on their purchase (20% down), but our program loan does not have this restriction, assuming the new housing cost is not too high compared to the previous housing cost. (For an explanation of housing-costs comparison, contact our staff.)
Allows for a Large Purchase, Even on Your First Home
Many new homebuyers want to purchase a home that allows them to grow their family and their lifestyle. Instead of purchasing a “starter home” and moving after a few years, young buyers now preferred to purchase a home that has room to grow. You may not have children now, but you will soon; you may not need a large garage for a boat, golf cart, and motorcycle, but you will soon.
With this loan, even first-time homebuyers can get financing as high as $3 million, meaning you could purchase a wonderful home with plenty of space to grow your family and your lifestyle.
Down Payment and Reserves Can Come from a Gift
Earlier, we discussed how the down-payment and cash-reserve requirements are very low with this program, at least compared to other jumbo loans. To make matters even better, there is another advantage: they can both be funded by financial gifts.
100% of the down payment and reserves can be sourced from a gift that comes from a generous family member. There are almost no other lenders that will allow gifts on a jumbo loan, at least not 100%. This make qualifying for the loan even more convenient and affordable for first-time homebuyers.
To use a gift as your down payment, you need to supply a gift letter from the donor. This gift letter will need to outline various information, including a statement that the money being given is not a loan but is in fact a gift that won’t require repayment.
No Lot-Size Limitations
Not only are there high limits for the total amount you can borrow, but there is no limitation for lot size. With no acreage limitations, you’ll have access to a wide variety of properties, including country estates with open pastures and lawns. (However, the land value of any property over 5 acres can’t exceed 35% of the total property value. For details, contact our staff.)
Other lenders will limit property purchases to 10 or even 5 acres, so this is a significant advantage if you want a place where you can build, grow, or simply have open space for your family.
Available for Condo Purchases
On the other hand, many young buyers prefer to purchase condos, which are usually more convenient, more affordable, and easier to manage. With this program, you can complete the purchase of a condo and enjoy all the same benefits that you would receive if you were buying a single-family home.
Not only that, but you can use the minimum-down-payment program to purchase either a warrantable or non-warrantable property. Most lenders, especially jumbo lenders, won’t work with a condo purchase, but this is not an issue if you choose our minimum-down-payment program. Also, with this program you will avoid the extensive condo approval process that could result in a denial of the loan with other lenders.
Learn More About Purchasing Your First Home
If you are a first-time buyer, contact our staff to learn more about minimum-down-payment jumbo loans. We take a common-sense approach to lending, increasing your chances of mortgage approval.
Purchasing your first home is exciting, and we will be thrilled to help support your purchase!