Question: Are there are loan options you’d recommend if I don’t have 20% or more saved up for a down payment?
Answer: There are an abundance of loan products on the market that cater to different professions, down payments, and financial circumstances that you should consider. “Rate shopping” is easy and moderately effective if done correctly (e.g. compare the APR not the interest rate), but “product shopping” can be much more valuable and something an informed real estate agent can assist you with. Here are some of my favorite loan programs and the lenders I work with who provide them:
Homeowners Buying And Selling:
Second Trust/HELOC Program from First Home Mortgage: Jake Ryon (firstname.lastname@example.org, 202.448.0873)
This is a great program for current homeowners who will be buying and selling simultaneously. It allows you to use the future proceeds from your home sale to make a larger down payment on your new home, before selling your current home.
Through First Home Mortgage, Jake Ryon partners with local banks and credit unions to provide you with a second trust that allows you to put as little 5% down up to nearly a $1,000,000 loan amount. The second trust finances the remaining amount of your down payment (e.g. 15% if you put down 5%).
The second trust payment is interest-only, can be paid off any time, and can be used like a bridge loan so you can purchase your next home without a home-sale contingency.
The Doctor Loan Program is a residential mortgage loan specifically created for licensed medical professionals to make obtaining mortgage financing easier and more hassle-free. It recognizes the financial toll of medical school and strong, stable future income post-graduation. The rates on these loans are also fantastic!
Eligible Doctors include:
Licensed Residents/Interns/Fellows in MD and DO programs
Doctors of Osteopathy
Doctors of Dental Medicine/Surgeons/Orthodontics/General Dentists (DMD/DDS)
Psychiatrist licensed as a Medical Doctor
Available financing terms include fixed and adjustable rate mortgages for purchases and rate/term & cash out refinances.
0% down up to $750,000 loan amount
5% down up to a $1M loan amount
10.01% down up to a $1.5M loan amount
No mortgage insurance required!
Large Loan Amounts:
Non-Confirming Jumbo Loan Program from Wells Fargo: Email me for contact info at Eli@EliResidential.com
It’s not just Doctors who can find low down payment options without mortgage insurance for high-value (jumbo) loans. Wells Fargo’s “Professionals” Program lets you put 10.01% down on loans from $485,000 up to $1,000,000, and $1,000,000 to $1,250,000 with 15% down, without any mortgage insurance and the rates are incredible. They have options for fixed and adjustable mortgages as well. A high credit score and strong income are key factors for qualifying. It’s referred to as the “Professionals” Program because it’s popular amongst high earning, non-medical professionals like lawyers and consultants.
Low Down Payment:
This program enables you to put as little as 3% to 5% down using conventional financing (not FHA) and eliminate the monthly mortgage insurance payment by making a one-time more affordable payment. This provides multiple benefits including a potential increase in buying power by reducing the Debt-to-Income ratio (lower monthly payment), allowing you to negotiate for the seller to make this payment by rolling it into closing costs, and ensuring that the entire payment is tax deductible (confirm with your tax advisor).
Choosing The Right Lender
Choosing the right lender is a combination of selecting the program that’s right for you, getting the best market rates, and working with somebody who provides a high level of service. In 2017 I wrote an article with additional tips for selecting and comparing lenders. If you have any questions about the programs I summarized above, other lending programs like construction and rehab loans, or would like an introduction to one of my preferred lenders please reach out to me at Eli@EliResidential.com.