Jumbo loans are making a comeback in Orange County. A mortgage is considered "Jumbo" in Orange County when the balance is greater than $729,750. The $729,750 limit is the max amount for a Conforming Fannie Mae/Freddie Mac loan. It is also the max limit for a FHA loan, which only requires a 3.5% down payment. While the $729,750 limit covers most properties in Orange County, the higher priced areas have had limited financing options since the mortgage meltdown began in late 2007.
More Jumbo Programs Available
Lenders are more willing to fund Jumbo programs in 2010 than over the past few years, as can be seen by the competitive interest rates offered on thee programs. Depending on the loan amount and loan to value, interest rates on 3 and 5 year hybrid adjustable rate mortgages have been in the mid 3% to high 4% range, while even the 30 year fixed programs are experiencing low rates. But it the actual underwriting guidelines that are loosening. There are even Jumbo loan programs for investors, up to $3,000,000 at 65% loan to value.
Loan to Value for Orange County Jumbo Loans
We probably won't see 100% financing on $1,000,000 properties any time soon, but it's good to see 80% financing again. The "piggy back" loan is back. For example, one lender offers the following scenario. On a $1,230,000 purchase price, the first mortgage will be $729,750, along with a Home Equity Line of Credit of $250,000, resulting in only 20% down on a $1,230,000 home. An even more aggressive scenario would be for a $4,000,000 purchase price. The first mortgage can be $3,000,000 (75% loan to value) along with a 2nd of $200,000, resulting in only a 20% down payment on a $4,000,000 purchase price.
It does take perfect credit, plenty of verifiable income, and reserves in the bank after the closing. For those Orange County home buyers wanting to keep the down payment to a minimum on a $1,000,000 plus home, they should have a FICO score in the 740 and up range and plan on having between 12 and 24 months of mortgage payment in reserves after closing.
Who is Offering These Programs?
The secondary market for Jumbo loans has not made a comeback yet, so who is funding these loans? A combination of "big" banks, Portfolio Lenders, Credit Unions, and mortgage banks. To find out about the programs available, Orange County home buyers and owners need to contact an experienced Orange County lender who has knowledge about and access to the wide variety loan options.
Authored by Tim Storm, an Orange County, CA Loan Officer with 20 year experience– Please contact my office at Home Point Financial for more information about an Orange County, CA home loan. 949-829-1846.
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949-829-1846 | tstorm (at) ochomebuyerloans.com