The thought of homeownership may seem more like a distant dream than reality, given the sky-high property prices these days. 

But you don't have to break the bank in order to close on your dream home! With some savvy planning and a little knowledge of available mortgage products, owning your own home could be within reach sooner than you think.

In this article, we'll dive into the details of how you can obtain a 5% down jumbo loan and why it might just be the perfect mortgage solution for you.

TLDR Key Takeaways

• Lenders are changing their product offerings to include low-down-payment mortgages to meet the demands of potential borrowers. 
• To get the keys to your dream home, lenders need proof of a stable income source along with a good credit score, low debt-to-income ratio (DTI), personal asset statements, and a driver's license. 
• You will have the best chance of obtaining a jumbo loan with the lowest down payment if you demonstrate the highest level of responsibility and reliability.

Is It Even Possible to Get a Jumbo Loan with Only a 5% Down Payment?

The short answer is yes; getting a jumbo loan with a down payment of 5% is possible. 

In the past, jumbo loans required a minimum down payment of 20% because they went beyond conforming loan limits set by the Federal Housing Finance Agency (FHFA), along with Freddie Mac and Fannie Mae.

This limit is capped at $726,000 for most of the continental US, but in some high-cost states, it's as high as $1,089,300.

However, as the mortgage market continues to evolve, more lenders are offering jumbo loan products with low down payments to meet the needs of prospective borrowers.

It's worth noting that while a down payment of 5% is lower than the typical 20% down payment required for a conventional mortgage, it is still a significant amount of money. 

If you are considering a jumbo loan with a low down payment, consult with a mortgage lender or financial advisor to determine if this is a feasible option for you.

What Do I Need to Qualify for a 5% Jumbo Loan?

While the requirements will vary from lender to lender, generally speaking, you'll need to meet the following criteria: 

1. Proof of Stable Income: To determine if you can repay your mortgage, lenders look at your finances in detail, which involves examining two years' worth of tax returns, bank statements, and/or pay stubs.
2. Strong Credit Score: The minimum credit score you'll need to secure a low down payment jumbo loan is 680; however, a higher credit score may be required for larger loan amounts and to lock in lower interest rates.
3. Low Debt-to-Income Ratio (DTI): Lenders will evaluate your DTI to ensure you're able to manage your monthly payments. Typically, they want this ratio to be less than 45%.
4. Personal Asset Statements: Many lenders may also want to review two months' worth of asset statements to show that you have the capacity to cover any additional debt payments that may arise during the course of the loan.
5. Driver's License: You will also need to provide a valid driver's license and a form of identification to confirm you are who you say you are.

How to Increase the Odds of Securing a Loan?

Increasing your chances of obtaining a jumbo loan with a low down payment largely depends on how you present yourself to the lender. Here are some tips that can help.

Strengthen Your Credit Score

One of the most important factors lenders consider when approving a loan is your credit score, so it's vital that you check your credit report and clean it up, if necessary, by:

• Paying your bills on time
• Reducing or paying off credit card balances
• Avoiding taking on more debt

Reduce Your DTI

Your debt-to-income (DTI) ratio is another key factor in determining whether you are likely to be approved for a loan. Luckily, if you're in the process of improving your credit score, you'll actually work on lowering this as well.

Ideally, your DTI should be 36% or less of your gross monthly income; however, some lenders will let you have a DTI as high as 45%.

Increase Your Cash Reserves

Having a large cash reserve demonstrates to lenders that you are capable of managing your finances, even if something unexpected happens.

The general rule of thumb is to have enough money in the bank to cover six months of living expenses, although this amount may vary depending on the program or lender you're using.

Have All Your Documentation Ready to Go

It never hurts to be over-prepared—especially when you're trying to look financially responsible and attractive to your lender. 

So, ensure you have all the documents they'll need ready to go, including proof of income and personal asset statements.

Additionally, if you're self-employed, you might want to have your accountant draft up a CPA letter that covers:

• Percentage of ownership
• Length of self-employment
• Operational status

Work with an Experienced Lender

Don't forget that working with an experienced mortgage broker can make all the difference when you are trying to secure a jumbo loan with a 5% down payment.

They'll be able to:

• Guide you through the process 
• Help you find the best possible loan terms
• Provide advice on how to improve your chances of getting approved

Get a Jumbo Loan with Only 5% Down Payment MDL

If you're looking for the perfect solution to purchase a high-valued home without having to break the bank, then look no further than Modern Day Lending.

At MDL, we understand that different people have different financial needs, and we strive to provide our customers with innovative solutions that fit their individual requirements. 

Here's what you can expect from us:

• Transparent Application Process: Each step of the application process is transparent and hassle-free, so you can make an informed decision.
• Competitive Rates: Our competitive rates provide an unbeatable combination of quality and affordability for jumbo loan products, saving you even more money.
• Quick Approval: To help our customers get their homes as soon as possible, we strive to provide quick approval times for jumbo loans.
• Superior Customer Service: We are committed to offering exceptional value for our customers, empowering them to make smart financial decisions when choosing a mortgage product.

If you're ready to make your dream of homeownership a reality, don't wait another day! 

Our experienced team is standing by, ready to answer any questions you may have and guide you through the process from start to finish. 

Contact Modern Day Lending today and get started on the path to owning a home with only 5% down.