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The Largest Non-QM Mortgage Lender in South Carolina | Home Spring Mortgage
Home Spring Mortgage is the the largest non-qm (non-qualified) mortgage lender in South Carolina, providing diverse mortgage loan options for borrowers to achieve their dream of homeownership. Learn more.
Jumbo Loans With 5% Down
What Are Jumbo Loans With 5% Down?
A jumbo mortgage or a jumbo loan is one that exceeds the Federal Housing Finance Agencies’ limits. They cannot be secured by institutions like Freddie Mac or Fannie Mae, which makes them much riskier for lenders to take on.
What are the Jumbo Loan Parameters?
Fannie Mae and Freddie Mac have parameters outlining how large of a loan people can take out for their mortgage. The limits are called “conforming loan limits.” When mortgage amounts fall under the limits, they are insured to protect the lender. Jumbo loans exist outside of those parameters and are sometimes called “non-conforming loans.”
The limits of conforming loans vary from one state to another.
In 2021, a person can only borrow up to $548,250 to buy a single-family unit in most states. Other states, like Hawaii and Alaska, allow up to $822,375. Multi-family unit limits go higher.
Jumbo Loan Rates
Jumbo loans command a higher interest rate because they have more risk involved for the lender. But not all jumbo loan rates are that much higher. You can get either a fixed or adjustable loan rate for a jumbo loan. However, they do have stricter requirements attached to the loan, depending on the type of property, credit score, debt-to-income ratio, and down payment amount.
Down Payment
When you take out a jumbo loan, a higher down payment is typically required when compared to other traditional loans. Most lenders will ask for as much as 20% down to secure a jumbo loan for a single-family unit. The down payment is determined by your credit history and the loan amount. You need a FICO score of 740 or more, or better than 680, with 5% down, on average. If you have a score of less than 640, a down payment of 10% is required.
Credit Score
For any traditional loan, a credit score is a key factor, and this is especially so for a jumbo loan. A person’s credit score is a numeric indication of how reliable a borrower is. A credit score can range from 300-850. Many factors play a role in determining a credit score. In most cases, you need a minimum of a 700 credit score for a jumbo loan for a one or multi-unit dwelling and the loan cannot exceed $1M. Anything from $1M to $1.5M requires a score of 720 or greater. Jumbo loans between $1.5M and $2M require a credit score of 740 or more. If you are taking out a jumbo loan on a second home, your credit score minimum is anywhere from 720-740 or more depending on the loan amount.
Debt-to-Income Ratio
A debt-to-income ratio is a value used to compare what someone has coming in every month and what they have going out. It is calculated by taking your minimum monthly payment amounts before taxes. Therefore, if your bills total $1,000 a month, and you make $2,000 before taxes are taken out, your debt-to-income ratio is 50%. Low debt-to-income ratios are required to obtain a jumbo loan. Typically, a traditional lender will require a DTI that is 45% or less to qualify for cash-out refinance or purchase. One way to get around a higher DTI is to put down a higher down payment or to have a good credit score.
Hurdles to Obtaining a Jumbo Loan
Lenders May Ask for Cash Reserves
Lenders will want to see your bank statements to get a full picture of your financial health. Most lenders will ask for buyers to have at least 12 months’ worth of savings in reserve to cover a loan. Lenders might also take into account up to 70% of your retirement account accumulation. There are also occasions where gift or business funds might be considered as reserves.
Steady Income
Lenders only offer jumbo loans to those buyers who have both regular and predictable income. They often require a minimum of two years of tax returns and 1099s for a conventional loan. For a jumbo loan, the lender might also require that you verify that your income will not change once you are approved for the loan.
Underwriting
Jumbo loans, unlike conventional ones, require manual underwriting. A professional will sift through your credit history, bank statements, and assets to ensure that there isn’t anything they are missing that might flag you as an increased risk. If you have any blips on your credit history, you will have a hard time getting approved.
Higher Closing Costs
Closing costs are usually anywhere between 3-6% of the total amount of the loan, but they are higher for jumbo loans. If you are taking out a loan of $500,000, you can typically estimate as much as $10k-$25k at closing.
Jumbo loans are loans that exceed a specific loan amount. Because they are considered riskier than other types of loans, they may not be insurable.
Testimonials
Testimoial 1
Another couple weeks and we will have been in our new house 1 full year! What a journey – and thanks to you and HomeSpring it didn’t hurt too much, once I found you! Being Self-employed with some “past credit challenges” put me right into your preferred client range. Before you, we went through a multiple-months long, excruciating experience with another lender that didn’t work for us. Once we found you, the approval process was quick and painless! We had Schumacher Homes build our home and they told me your company was the quickest, easiest to work with and most enjoyable lender they have worked with… They’re nationwide and I believe they built about 200 homes in the Lowcountry last year. To underscore your ease of use… we refinanced the house after 6 months with a well-known national bank. What a pain in the butt! Took 3 months, we had to resubmit our financials every month and we had to work hard to get the refinance! Thank God that’s over!! Rest assured I’ll mention Chris Lathbury and HomeSpring Mortgage to anyone I meet who may need you! If you need a reference, feel free to pass on my name and I will sing your praises!! Thanks for all your work and help in making such a potentially stressful process go so well!
Testimonial 2
I want to say thank you to Chris Lathbury and the entire team at HomeSpring Mortgage for being so wonderful and gracious to me during the entire application, underwriting and funding process for the purchase of my home. It didn’t stop there Chris was very active in servicing the loan after funding. Whenever I would reach out with a question or had a concern Chris would always return my email or call within 24 hours max. Thank you from the bottom of my heart for all your help in accommodating the loan process to align with my relocation and new job appointment. It has been a pleasure to work with all of you! I highly recommend Home Spring Mortgage for all your real estate loan needs, you will not regret it.
Firstly, it is a major task to apply for and be approved for a mortgage and when going through that process you want a mortgage lender that understands your specific needs and how to make that a reality. HomeSpring Mortgage is that company. After dealing with several lenders and their numerous delays I found Chris and HomeSpring. They were professional, communicative, truthful and a company that gets the job done. HomeSpring is the way to go when looking to finance your home. Solutions is what they are about.
Testimonial 3
My clients and I found Chris after another lender let us down. He listened to us, looked over our contract, and even spoke with the seller of the home my client’s were purchasing to help salvage the deal. With an incredibly tight timeline, and tons of emotions, Chris was the true hero in this transaction and made it happen for us. Words truly do not express the level of gratitude I feel for how hard he worked for us. To say he went above and beyond is an understatement. This was my first time working with Chris, and the person who referred me to him told me he has a heart of gold, and he did an outstanding job living up to that reputation. He will be my go-to for these unique financing situations from now on!
DrewK
Hey Norb– We just closed and I just wanted to reach out and sincerely thank you, Chris, and HomeSpring Mortgage for working with us on this. As you can imagine, we’ve had a very difficult time getting back in the good graces of lenders, especially on this scale, and needed a chance, and ya’ll gave us that. We’re excited about being able to do our renovation project now, when only a month or two ago it was looking highly unlikely. Also, I appreciate the timeliness and level of communication that ya’ll showed throughout the whole process, which made everything run smoothly.
Our intentions are to not stick around at the higher rate for the long term, as I’m sure you can understand, when hopefully rates come down at some point and our credit profile should continue to improve. Whenever that time comes, we will most certainly work with y’all again to hopefully capture a lower rate.Thanks again!
Drew K
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