Getting Approved for a 95% LTV Jumbo Loan

Buying a home is an exciting time, but qualifying for a mortgage can be stressful Many buyers assume they need a 20% down payment. In reality, there are low down payment options like 95% LTV jumbo loans While jumbos have stricter requirements, a low down payment jumbo loan makes luxury homes more accessible. This guide will explain what 95% LTV jumbo loans are, who qualifies, and tips for getting approved.

What is a Jumbo Loan?

Before diving into 95% LTV jumbo loans it helps to understand what a jumbo loan is. Jumbo mortgages are loans that exceed conforming loan limits set by Fannie Mae and Freddie Mac. Here are the current conforming limits

• $647,200 for single-family homes in most areas
• $970,800 in high cost areas like San Francisco and New York City

Any loan over those amounts is considered a jumbo mortgage. For example, if you wanted to buy a $900,000 home with 10% down in Texas, you would need a $810,000 jumbo loan.

Jumbos are offered by private lenders like banks and credit unions. They are more work and have higher risk for lenders. As a result, jumbos come with stricter borrowing standards compared to conforming loans.

What is a 95% LTV Jumbo Loan?

The loan-to-value ratio (LTV) measures how much you borrow versus the home’s value. Down payment plays a big role. A 95% LTV jumbo means you can put as little as 5% down.

For example, if you purchase a $1,000,000 home a 95% LTV jumbo allows you to put down $50,000. The remaining $950,000 is financed with a jumbo mortgage.

A lower down payment results in higher LTVs. 20% down is 80% LTV, 10% is 90% LTV, etc. Many lenders limit jumbos to 80-90% LTVs. 95% financing opens jumbos to more buyers.

Jumbo Loan Requirements

While 95% LTV jumbos offer low down payments, borrowers must meet strict requirements:

Credit score

• Minimum 740 credit score is common
• Some lenders may accept scores as low as 720

Down payment

• At least 5% down

Income and assets

• Lower DTI requirements (varies by lender)
• Cash reserves equal to 12 months mortgage payments

Meeting minimum jumbo requirements is important. The more you exceed them, the better. For 95% LTV jumbo approval target at least:

• 760+ credit score
• 10-15% down payment
• DTI under 35%
• 18-24 months of reserves

A financial cushion shows the lender you can manage the larger loan.

Tips for Getting Approved

Here are some tips to boost your chances of getting a 95% LTV jumbo mortgage:

Shop around

Each lender has different requirements. Work with a broker to shop multiple lenders and find one that’s a good fit.

Pay down debts

Lower credit card balances and loans to decrease DTI. Paying down installment loans can also help your credit score.

Make a larger down payment

Putting 10-15% down instead of 5% improves your chances. Gift funds are OK if documented properly.

Choose a lower purchase price

Keeping the loan amount under $1.5 million versus maxing out at $2-$3 million can help.

Pick a fixed rate

Lenders view fixed rates as less risky than ARMs. Stick to a 30 or 15-year fixed rate.

Get a co-signer

Adding a co-signer with high income and credit score improves debt-to-income.

Alternatives to 95% LTV Jumbo Loans

95% LTV jumbo loans aren’t for everyone. Here are a couple alternatives if you don’t qualify:

Piggyback loan – This combines a jumbo first mortgage with a smaller HELOC or second mortgage to remove PMI.

80/10/10 loan – Similar to piggyback but financing is 80% first, 10% second, 10% down payment.

Conforming loan + down payment assistance – If the loan amount falls below conforming limits, builder or nonprofit programs may cover your down payment.

Pay down debts – Taking 6-12 months to improve your credit and DTI may get you approved for a lower LTV jumbo.

Is a 95% LTV Jumbo Loan Right for You?

A 95% LTV jumbo loan opens up jumbo financing to buyers who don’t have a large down payment saved yet still want a luxury home. While qualifying is challenging, it is possible if you have great credit, low debt, and ample reserves. Being flexible on factors like the loan amount and property can also help your chances.