In my last post about Jumbo Loans, I discussed the availability of a 30 year Fixed Jumbo Loan up to $2 Million at 80% financing, and how great this was for those looking to purchase or refinance higher end homes in San Diego County or other high price areas of California.
In today’s post I would like to talk about a few unique Jumbo Loan Programs that can help buyers looking to purchase million dollar homes in San Diego.
Pledged Asset Program
The Pledged Asset Program allows the borrower to get up to a 90% Loan to Value (LTV) loan up to $2 Million without needing Mortgage Insurance (MI). By pledging Eligible Assets, the borrower eliminates the need to liquidate assets to obtain the cash needed for a larger down payment, avoids capital gains taxes associated with such liquidation, maintains a more liquid position, and continues to benefit from any future earned interest, dividends, and appreciation in their pledged assets. The pledged assets may be kept with a brokerage firm of the borrower’s choice, as long as certain pledge account requirements are met and trading is still allowed in the pledged account. Assets that are eligible for this program include stocks, bonds, mutual funds, CDs, money market, savings, and others (Retirement accounts are not eligible). One of the greatest features of this program is that the Pledged Assets do not need to be the borrowers. They can come from family members or others that you have a close relationship with. The Pledged Asset Program can be used as a purchase loan not only for primary residences, but also for second homes and investment properties. It can also be used in conjunction with a cash-out refinance. Below I have included an example of how this would work on a purchase in San Diego County.
Purchase Price $1,500,000
Max LTV (per matrix) 65% = $975,000
Pledged Asset Max LTV 90%= 1,350,000
Difference $ 375,000
Money Accounts (Liquid) 1:1 pledge = $375,000
Market Accounts 2:1 pledge = $750,000
Asset Depletion Program
The Asset Depletion Program allows high net worth borrowers, who may not show a lot of yearly income, to use assets as income to qualify. This works great for retiree’s or trust fund recipients who do not show a large amount of income on their taxes, but do have a large amount of assets and would like to purchase that dream house in San Diego. Normally they would not be able to qualify, but this program would help. To get the amount available as additional monthly income, the current value of the borrower’s assets plus a 5% interest rate would be amortized over the number of years between the borrower’s current age and age 85. If the borrower is age 62 or older they may use their retirement account assets as well.
2 million dollars in assets, Age 65
= $13,199 per month additional income to qualify
Foreign National Program
There is also a Foreign National Program that allows loans up to $2 Million at LTVs up to 50%. There are not many programs available in the current mortgage market for Foreign Nationals. As a San Diego Mortgage Banker and Mortgage Broker, I see this as being a great opportunity for foreign nationals to enter our market and not have to pay all cash.