How to finance jumbo/large acreage?

[Jeremy Dockendorf]

Your goals and story: Looking at purchasing a primary residence - not profit generating. We do not “need” to have this property, but would enjoy moving here if we can get it for the right price/payment. It’s a beautiful property my family would enjoy living at. 

Type of property: Single family home on 50 acres. This is a “horse property” with 4 large outbuildings (stable, riding arena, barns). House needs about $45k for a remodel for us to be comfortable with the move.

Location of property: Minnesota

Purpose of financing: Purchase

Type of financing sought: traditional mortgage - but seller has offered to finance up to 5 years. 

Current or prior ownership of real estate: only primary residence

Value of property at present and/or your offer price: $790k asking, I’m looking to buy for <$650k

Anticipated or actual appraisal issues: no

Down payment or equity: we could put up to approx. $120k, but would like to do $75k down and keep about $45k for remodel unless we can finance it

Source of down payment funds, if applicable: current home proceeds

Income Source: Salaried plus commissions/bonus - but both wife and I have to qualify with base pay only since we do not have two years at current employers.

FICO: Excellent

I think seller financing the whole thing is too risky to us (seller wants $100k down and balloon in 5 years). We have no problem qualifying for a mortgage. The challenges we face:

1. The price is too high for a conforming loan. 

2. For most banks the acreage is too much for a “standard” jumbo loan. 

3. We won’t have enough cash for 20% down. (Maybe closer to 10-15%)

4. Our DTI could be close to 35-40% depending on purchase price because about a third of our income is commission/bonus not counted by the banks yet.

The seller has had it listed for about a year. He is overpriced at $790k and it is a somewhat unique property for the area considering the indoor riding arena and other equine amenities. The property IS split into two parcels (37 acres with all the buildings and 13 acres of pasture). 

We have been talking to farm and rural property lenders. Typically they want 20% down to avoid PMI and have a rate around 5%. I'd love to hear what kind of ideas y'all have for the most optimal financing scenario!