When you are planning a major purchase, such as buying a home or refinancing your existing mortgage, having the right financing can make all the difference. 

Yet many prospective borrowers find it difficult to make a 20% down payment on a jumbo loan upfront. Enter low down payment jumbo loans.

But, of course, it's not quite that simple. When it comes to low-down payment loans like 10% or 5%, there are some things you need to know to maximize your chances of success.

In this blog post, we'll explore exactly that; We'll cover how to secure a 10% down jumbo loan for you to jumpstart your way into homeownership.

TLDR Key Takeaways

• With the right qualifications, you could qualify for a jumbo loan with just 10% down.
• To qualify for a low down payment jumbo loan, your lender may require an acceptable credit score, sufficient income, manageable debt-to-income ratio (DTI), adequate cash reserves, and possibly Private Mortgage Insurance (PMI). 
• To maximize your chances of securing a loan, you'll want to improve your credit score, lower your DTI, document your income and assets, and shop around. 

Is a 10% Down Payment Enough for a Jumbo Loan?

A jumbo loan with a 10% down payment is possible in some cases, but it will depend on many factors, including the lender's underwriting guidelines, the borrower's financial profile, and the type of property.

Underwriting Guidelines

Since jumbo loans exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac, the terms and requirements can vary significantly from one lender to another.

Some lenders may have more flexible underwriting guidelines that allow them to evaluate a variety of factors to qualify borrowers for a 10% down payment. Others follow strict guidelines that can be hard for some borrowers to adhere to.

You'll need to research or speak with different lenders to find out if you meet their specific requirements.

Note: As of 2023, the conforming loan limits on a single-unit property are $726,000 nationwide, but they go up to $1,089,300 in some states with high costs.

Borrower's Financial Profile

A borrower's financial profile will also be taken into account when determining whether to approve them for a 10% down payment jumbo loan.

Generally speaking, borrowers must have strong credit scores and income streams sufficient to cover the jumbo loan payments and other monthly debts. We'll cover the requirements in more detail below.

Property Type

While borrowers can use jumbo loans to cover a wide range of properties, if you only want to put 10% down, it limits your property type to primary or secondary residences. 

The majority of lenders don't offer 10% down jumbo loans for multi-unit properties, vacant land, or commercial properties.

What Are the Requirements for 10% Jumbo Loans?

The requirements for obtaining a jumbo loan with a 10% down payment will vary depending on the lender and the specific program being offered. 

However, there are some common requirements that borrowers should be aware of when seeking a jumbo loan with a low down payment. These may include:

1. Credit Score: Most lenders require a minimum credit score of 660 to qualify for a jumbo loan with a low down payment. However, some programs require a score of 700.
2. Income: Borrowers should provide at least two years of income documents, such as pay stubs, tax returns, and bank statements.
3. Debt-to-income ratio (DTI): Many lenders want to see a DTI of 36% or lower, but typically, they will accept DTIs up to 45%.
4. Cash Reserves: Borrowers should be prepared to provide proof of sufficient cash reserves to show they can make payments in the event of an emergency.
5. Private Mortgage Insurance (PMI): While it is possible to secure a jumbo loan with just a 10% down payment, some lenders may require you to purchase PMI to minimize their risk.

What Are the Best Ways to Boost Your Odds of Securing a Loan?

There are several ways you can boost your odds of securing a loan:

Improve Your Credit Score

You'll need a minimum of 660 for most jumbo loans, but the higher your credit score, the more chances you have to secure the loan amount you desire and qualify for a lower interest rate.  

You can improve your credit score by:

• Paying your bills on time
• Reducing your credit card balances
• Avoiding applying for new credit too frequently
• Disputing incorrect information on your report

Lower Your DTI

This ratio gives lenders an indication of your financial health. A lower ratio means you will have more chances to be approved for a loan, so strive to reduce debt and maximize income when possible.

Your DTI is closely tied to your credit score, so if you're working on improving your score, this ratio should lower. 

Thoroughly Document Your Income and Assets

Lenders will delve into your financial history and review your income and assets, so it's vital that you provide accurate documentation of both.

The more prepared and organized you are with your financial documents, the smoother your application process will be. Make sure you document all sources of income, which includes:

• Two years' worth of tax returns
• Two years' worth of W2s 
• Paycheck stubs 
• Bank Statements (at least 12-24 months)
• Personal Asset Statements (at least two months' worth)

Shop Around

Different lenders may have their own lending criteria and may offer varying interest rates and loan terms. It can be helpful to shop around and compare offers from multiple lenders to find the best deal.

Make sure you shop around and find a lender that:

• Suits your unique needs
• Has competitive rates
• Has flexible repayment options

MDL Can Help You Obtain a Jumbo Loan with a 10% Down Payment

If you've been told that it's impossible to obtain a jumbo loan with only a 10% down payment, think again. Modern Day Lending offers prospective homeowners plenty of options, even those with less than 20%, to put down on their dream home. 

We have access to flexible loan terms and specialized loan programs to help you get the most out of your jumbo loan. Here's what you'll need:

No matter your situation, there are plenty of Modern Day Lending options available to help you obtain a jumbo loan with a 10% down payment.

We'll help guide you every step of the way so that you can be confident in your home financing decision. 

Contact one of our mortgage experts today, and let us show you how we can make all the difference when it comes to making your home ownership dreams a reality.