Home buying in Manhattan Beach, Redondo Beach, Hermosa Beach, Torrance, Hawthorne, and Rancho Palos Verdes can get costly. You may have to take out a loan and not just any loan, a jumbo loan. But what if you are a first time buyer? Living in an expensive housing marketing may cause first time buyers some struggle to find a home under the Jumbo Loan threshold.
What is a Jumbo Loan?
For 2018 the threshold for non jumbo loans is $679,650. Anything over that and you are now in jumbo loan territory. These non conforming loans are not guaranteed by Fannie Mae and Freddie Mac. Meaning the risk is higher for lenders and they often have more requirements. The bright side is this means you can borrow as much as your lender is willing to loan you.
First Time Buyer Loans
Typically a lender will ask for 20% down on a jumbo loan to purchase that Manhattan Beach home you have been eyeing. This isn't a standard though, some applicants will find lenders who require less than 20% down. Some tips to qualify for a jumbo loan with less money down.
Have a credit score of 720 or higher. Lenders view your credit score as a "report card" rewarding higher scores with higher limits and better rates,
- Build your assets. Affluent buyers can buy homes with 0% down buy using their assets as collateral against 20-40% of the loan value. You can typically find these loans through the bank holding your assets.
- Build your liquid assets. The best jumbo loans are for 65% of a homes value or less. That means you will need to make a down payment of 35% or more. You could also seek a second position loan to bring down the loan-to-value.
- Set aside a reserve. Buying a home is costly. Especially after the purchase. Home buyers find themselves having to pay a mortgage and wanting to do upgrades, remodels and in some cases pay an HOA fee.
- Compare your lenders. Some lenders are more reserved while others are more aggressive. Some will not offer a jumbo loan to a first time buyer at all, making your great score even more critical. Do not be afraid to seek a better rate/terms.
South Bay Home Buying
We have amassed thousands of home sales. With the South Bay real estate market climbing we see home values climbing all across Hermosa Beach, Manhattan Beach, and Redondo Beach. We have great relationships with our lenders and are happy to offer our assistance to help you not only get the best loan but the best purchase price for your home.