How and where to get the best and lowest rate on JUMBO mortgage home or investor loan

[AJ Wong]

I think a 30+ year Jumbo Mortgage is arguably the 'best' money/mortgage high net worth investors can utilize. Where in the world can borrowers put sometimes as little as 0-10% down for a multi million dollar property in the single percentage digits? In many ways it is easier and less expensive to borrow more..if you know where and how to look. 

When seeking the most favorable financing for a luxury purchase most people advise to 'shop' around. This process can often require a significant amount of time and energy that if one hasn't prepared prior to the recent listing of their dream home, might not result in the most advantageous financing terms available. Having worked exclusively in mortgages since 2003 for both direct lenders and brokers, and the past ten years as a real estate broker, I've had a front row seat to the importance of jumbo mortgage options and the effect they have on positive investments and/or feasibility of successful transactions. 

Additionally with valuations skyrocketing for premier and luxury Real Estate, the proportion of jumbo mortgages is growing and creative income underwriting such as asset depletion (Using stocks/IRA/Cash equivalents of 36-84+ months) is an expanding approach.

Obtaining the absolute lowest mortgage rate on a jumbo mortgage, whether for primary or investment acquisition as well as down payment and amortization options can make the difference in the deal working. 

Behind the scenes jumbo and super jumbo mortgages often (and as expected) have stricter guidelines, for example loans above $1.5-2M might require two appraisals. Usually DTI's are also lower and income could be more stringently calculated. Or (as noted above) here are expanded conditions in which some lenders might allow you to remove the installment payment on the departing residence in the new debt to income calculation.

The lenders that have an appetite for jumbo and super jumbo mortgages often offer some type of incentivizing component to attract the luxury borrower profile. For example, I have a friend in southern California that towards the end of last year purchased his first family home in the $1.25M range. He is a professor and went to a local bank that had a local program for homes within their immediate geographical territory. If he agreed to open an account and deposit $250k as well as his direct deposits, with 20% down (on a 30 year fixed mortgage) they issued a jumbo loan that had a 5% in the front..(2023.)

Other examples include profession specific programs such as for Medical professionals, many offer 'smaller' jumbo loans on primary residence purchased with 0% down and very competitive rates. 

For the typical investor the search begins with their current banking institution (often limited in jumbo offerings) and even with some private and preferred divisions of notable banks I've seen some atrocious or uncompetitive pre qual letters or the inability to lend in the area of interest. Generally the next recommendation is from their real estate professional. If the RE broker is highly experienced or specialized in luxury sales this is likely an excellent initial and reliable source for outlets to get approved. For a second opinion, online searches can be a a bit overwhelming and unfruitful for the aforementioned reasons related to underwriting criteria. 

Some components of jumbo & super mortgages to be cognizant of: 

- Reduced down payments of 0%-20% for primary purchases

- Reduced rates on greater down payment (35-40%) 

- Reduced rates on ARM's (3/1, 3/6, 5/1, 7/1)

- Extended Amortization (40 Yrs) or interest only options

- Property type allowances (Non-warrantable condos/rural/acreage) 

- Interest rate buy downs or seller concession limitations

- Declining Market Restrictions

- Appraisal requirements 

- Unit count, many lenders will reduce the MAX LTV for 1+ unit.

- Time sensitive promotions or incentives 

- PreApprovals vs PreQualifications

The ultimate holders of jumbo and super jumbo notes are usually large investment banks, too big too fail banks or private institutional investors. The originators of these loans are larger correspondents or brokers and even with the various niche guidelines, the variance in actual rates on standard products can be marginal but notable. I've noticed anywhere from .375-1% differences depending on points and actual loan amount. 

Some examples I've seen on a conventional primary purchase with one of the largest, notable and premier Jumbo Non-Agency mortgage lenders (Standard Jumbo Mortgage Rate Today 5/15/24 @ 7.3%) 

- 6.5% on a 30 year fixed with 1 pt (standard $1M LA, 20% down, 760+ FICO, most states) 

- 6.875% on a $2M-3M @ Par on a $2M+ LA (30% Down 780+ FICO, Most States) 

With the right relationship and qualifications jumbo loan borrowers can often obtain mortgage rates below conventional rates, and can make the difference between a successful investment or offer for clients. Three excellent examples in which the mortgage made the deal: a jumbo STR investor mortgage purchased with 15% down and no PMI. A first time Triplex investor purchased with 10% down and no PMI, and a six plex listed cash only, with 25% down.

I joined our current mortgage team as a licensed NMLS Mortgage broker because they provide robust mortgage programs and specifically for their unique jumbo portfolio mortgage programs that provide buyers and investors with incentivizing and generally below market terms with the accessibility to underwriting for make sense exceptions. They personally facilitated a mortgage for a property acquisition in Oregon in 2020.