How to Secure a 95% LTV Jumbo Loan

As the market continues to drive prices up, potential buyers are looking for ways to maximize their borrowing power and find creative solutions to secure their dream homes.

Enter the rising curiosity surrounding 95% LTV loans.

While these loans provide a competitive advantage by allowing borrowers to minimize their upfront costs and maximize their financing, there are certain considerations to keep in mind.

We'll cover if this option is even available to jumbo loan applicants and what requirements you'll need to get the ball rolling.

TLDR Key Takeaways

Getting a 95% LTV jumbo loan is possible, but the process has grown increasingly complicated.
Even though requirements will vary from lender to lender, borrowers should still expect to meet stringent eligibility criteria.
Maximizing your chance of being approved for a 95% LTV jumbo loan requires some savvy financial planning.

Is It Even Possible to Secure a 95% LTV Jumbo Loan?

In a nutshell, yes, it's possible. But in recent years, the process of obtaining a 95% LTV jumbo loan has become extremely time-consuming and complicated.

Why? Because of the added risk.

Jumbo loans are already considered risker for lenders since they exceed the conforming loan limits ($726,000 for most of the US and $1,089,300 for "high cost" areas).

And when you couple that with a high LTV, well, it makes lenders a little more apprehensive.

This is because a borrower is basically asking to fund their entire purchase without having any real skin in the game or giving a whole lot of wiggle room with equity.

If something were to happen and a borrower defaulted on their loan, the lender would be left with a luxury property that they now have to try and sell to recoup their investment—which might be difficult if the market value falls.

They usually impose stringent qualifications for borrowers to safeguard their interests and minimize risk.

Essentially, this translates to a lot of hoop jumping and having your finances scrutinized with a fine-toothed comb before a lender presents you with a pre-qualification. For some, this process isn't worth it.

Prospective borrowers should be aware of these requirements (which we'll cover in the next section) before they submit their loan applications.

What Are the Requirements for 95% LTV Jumbo Loans?

Obtaining a jumbo loan with a high LTV is possible, but it's tricky. Each lender has their own guidelines; however, there are some standard requirements every lender will have, such as:

Credit score: Borrowers should expect to have an impeccable credit score (720 or higher).
Debt-to-income ratio (DTI): While a DTI of 36% or lower will make lenders feel more comfortable, some will go as high as 50%.
Income: Applicants must show evidence of a long-term, stable income via tax returns, bank statements, W2s, etc.
Private mortgage insurance (PMI): Some programs will waive this requirement, but most lenders require PMI.
Loan limits: Many lenders will not let the loan amount exceed $2 million for 95% financing.
Down payment: Borrowers are still required to put a minimum of 5% down, but a larger down payment may allow the lender to raise the loan limits.
Liquid assets: Some lenders want to see reasonable cash reserves (6-24 months' worth).

It's important to keep in mind that these are just general guidelines, and you should consult with a qualified mortgage professional for more information about these types of loans.

What Are the Best Ways to Boost Your Odds of Securing a 95% LTV Loan?

Securing a 95% Loan-to-Value (LTV) loan can be an extensive process, but there are many steps you can take to increase your chances of success.

Optimize Your Credit Score

This is one of the most important factors that lenders will consider when assessing your loan application.

You'll want to present the strongest credit score and history possible. To do this, we recommend the following:

Paying off any delinquent debts and avoiding late payments
Keeping your credit utilization ratio low (ideally, below 30%)
Checking your credit report for errors and taking steps to correct them

Reduce Your DTI

Aside from your credit score, lenders use this figure to determine whether or not the loan they are offering will be appropriate for you and won't add too much financial stress.

To keep this important indicator of your overall financial health in check, we suggest:

Paying off existing debts
Making sure that all your payments are up to date
Negotiating lower interest rates with creditors

Demonstrate Financial Stability

Remember, lenders see this type of loan as riskier, so the more evidence of your financial responsibility you can provide, the higher your chances of getting approved.

Lenders need to see that you are equipped with the ability to manage your payments. To help you prove your financial stability, we recommend:

Gathering documents to show proof of stable income for the past two years (tax returns, W2s, bank statements, etc.)
For self-employed individuals, it's best to get a CPA letter that details your business history and standing
Preparing personal asset statements

Build Up Your Savings

As part of their overall risk assessment process, lenders may require you to have a certain amount of money saved up to cover your loan in case of an emergency.

The more money you have saved up, the more likely you are to get approved. To take proactive steps to pad your savings, we recommend:

Creating a budget to help you save regularly
Setting up a separate emergency fund
Having at least six months of cash reserves in savings at all times

Maximize Your Jumbo Loan with a 95% LTV from Modern Day Lending

If you want to maximize the borrowing power of your jumbo loan, then Modern Day Lending is here to help. Our 95% LTV program offers the highest possible amount of borrowing for those looking to finance a luxury home.

We understand that 95% LTV jumbo loans can be a huge financial commitment—which is why our team of mortgage experts is here for you every step of the way.

With us at your side, you'll understand every aspect of your loan and feel comfortable taking on the necessary responsibilities.

From flexible lending criteria to quick underwriting processes, we have taken the hassle out of securing a loan for those with higher borrowing needs. Here's what you'll need: