How much home do I qualify for with a $70,000 down payment?

I’m working with a couple in Seattle who would like to buy a home. They have excellent credit (scores of 740 or higher) and are planning on using $70,000 for their down payment and closing cost. They want to know how much home they can buy based on their down payment.

The following rate quotes are effective as of January 24, 2013 at 12:20 pm. Rates change constantly, for your personal rate quote for a home located in Washington state, click here.

Conforming High Balance allows them to buy a home priced at $576,000.

The conforming loan limit in Seattle/King-County is currently $506,000. Using a conventional mortgage, they could buy a home priced at $576,000. 

Current mortgage rates for a 30 year fixed conforming high balance ($417,001 – $506,000) based on this scenario is 3.750% (apr 4.094).  

3.750% is priced as close to “par” as possible meaning there is as little rebate credit or discount points priced with the interest rate. We could adjust the rate slightly higher to create more rebate credit to help pay for closing cost or we could reduce the rate by paying more in discount points. 

The loan to value based on a sales price of $576,000 and loan amount of $506,000 is 87.874% which means the Seattle home buyers will have private mortgage insurance (pmi). For this client, we’re opting to include the pmi in their mortgage payment instead of paying it as an upfront additional closing cost or doing “split premium” mortgage insurance.  

The principal and interest payment is $2,343.36 plus private mortgage insurance of $282.52 gives us a “PIMI” payment of $2,625.88. Property taxes and home owners insurance are additional.

The Seattle home buyers will negotiate the seller paying for remaining closing cost and prepaids/reserves estimated at $7900, leaving their amount due at closing very close to $70,000.  If the sellers opt to not pay for closing cost and prepaids, the buyers can use rebate pricing (slightly increasing the mortgage rate) to offset the cost.

FHA allows them to buy a home priced up to $637,500.

FHA mortgages in the Seattle/King County area have a loan limit of $567,500. With a down payment of $70,000 they could buy a home priced up to $637,500. The big difference between FHA and conventional financing is the mortgage insurance. FHA has both upfront and monthly mortgage insurance. 

The current mortgage rate I’m quoting for their FHA scenario is 3.375% (apr 4.059%).

This rate is priced with a little more rebate to help reduce closing cost. If the Seattle home buyers want a lower rate with less rebate credit, they certainly can opt for that. Mortgage rates are not locked until we have a bona fide contract and the rates will be “floating” while they shop for a home.

The principal and interest on this rate and loan amount is $2,552.80 with mortgage insurance at $562.43 providing a PIMI payment of $3,115.23. Property taxes and home owners insurance are additional.

After the rebate credit, if the buyers negotiate the seller paying the remaining balance of their closing cost, prepaids and reserves in the amount of $4,000, the buyers will need around $70,000 for funds due at closing.

VA loans allow them to purchase up to $780,000 with a “VA Jumbo” loan.

The VA zero down loan limit in Seattle is $500,000. When a loan amount exceeds the limit, eligible Veterans can have a down payment based 25% off the difference between the sales price and loan amount.  

For example, a sales price of $780,000 less $500,000 loan limit = $280,000. $280,000 x 25% = $70,000 down payment.

The current rate I’m quoting for this VA Jumbo 30 year fixed loan is 3.250% (apr 3.379).

The principal and interest payment on this loan is $3,136.31. There is no mortgage insurance on a VA loan. Property taxes and home owners insurance are additional. 

If the seller pays for $4500 of the Veteran’s closing cost and prepaids, then the amount due at closing will be around $70,000.

USDA loans are not eligible in the Seattle area because it’s not a rural area.

If you are interested in buying a refinancing a home located anywhere in Washington state, I’m happy to help you. I’ve been originating residential mortgages at Mortgage Master Service Corporation since April 2000. 

2013 Conforming Loan Limits for Washington State Mortgages

The Federal Housing Financing Agency (FHFA) who oversees Fannie Mae and Freddie Mac, confirmed that conforming limits for 2013 will be unchanged from 2012. This means that a single family 1-unit residence in the greater Seattle area has a conforming loan limit of $506,000. Loan amounts above conforming limits are considered “jumbo” or non-conforming.

Four counties in Washington continue to have “high balance” loan limits above the “general” loan limits:

King County, Snohomish County and Pierce County:

1 Unit: $506,000
2 Unit: $647,750
3 Unit: $783,000
4 Unit: $973,100

San Juan County:

1 Unit: $483,000
2 Unit: $618,300
3 Unit: $747,400
4 Unit: $928,850

The remaining Washington counties have “general” loan limits:

Adams, Asotin, Benton, Chelan, Clallam, Clark, Columbia, Cowlitz, Douglas, Ferry, Franklin, Garfield, Grant, Grays Harbor, Island, Jefferson, Kitsap, Kittatas, Klickitat, Lewis, Mason, Okanogan, Pacific, Pend Oreille, Skagit, Skamania, Spokane, Stevens, Thurston, Wahkiakum, Walla Walla, Whatcom, Whitman and Yakima Counties:

1 Unit: $417,000
2 Unit: $533,850
3 Unit: $645,300
4 Unit: $801,950

HARP 2.0 for your High Balance (aka Conforming Jumbo) Mortgage

Conforming mortgages have a loan limit of $417,000 for a single family dwelling. Some counties in Washington, such as King, Pierce, Snohomish and San Juan, qualify for an additional higher limit known as "high balance" or sometimes called "conforming jumbo". In the greater Seattle area, the current high balance conforming loan limit is $417,001 to $506,000. (NOTE: FHA's high balance loan limit in greater Seattle is $567,500).  

High balance conforming mortgages may qualify for HARP 2.0, which allows home owners to take advantage of today's lower rates and refinance regardless of how much equity their home has lost.

You can learn more about Fannie and Freddie's programs and what I can offer Washington homeowners by reviewing my complete HARP 2.0 guideline.  

Here are some basic pointers for a high balance HARP 2.0 refi:

  • existing mortgage must be securitized by Fannie Mae or Freddie Mac. This is different than who you make your mortgage payments to. If when you obtained your mortgage, it was considered a jumbo/non-conforming (vs a high balance conforming), then odds are, it's not a Fannie/Freddie mortgage.
  • existing mortgage must have been securitized prior to June 1, 2009. This is different than when you closed your existing mortgage. Securitization often takes place weeks or even a few months after the mortgage is closed. 
  • maximum loan amount capped at current high balance loan limits. In greater Seattle, this is currently $506,000. It's possible to currently have a true high balance conforming mortgage at a higher loan amount since they were previously at $567,500 and rolled back to $506,000 recently. HARP 2.0 is limited to current conforming loan limits. A cash-in refinance may be a consideration for those home owners with those loans who want to take advantage of HARP 2.0.
  • no maximum loan-to-value unless your new mortgage is an ARM (they're capped at 105% ltv). It doesn't matter how much equity your home has lost – as long as it meets the rest of the criteria, HARP 2.0 may be an option.
  • most transactions do not require appraisal. Once an application is submitted, we are able to run it through Fannie or Freddies automated underwriting systems (DU or LP) which determines if an appraiser is required. Currently, a majority of HARP 2.0 refinances do not require an appraisal.
  • rate-term refinance only. You cannot take cash out or pay off a second mortgage/home equity line of credit.
  • second mortgages and helocs will need to agree to be subordinated. This is so that the new first mortgage keeps first lien position. I'm seeing most second mortgage lien holders being very cooperative and agreeing to subordinate. 
  • existing private mortgage insurance is okay as long as it can be transferred to the new loan. Even if your current mortgage has LPMI (lender paid mortgage insurance) it can probably be transferred to the new mortgage. 
  • owner occupied, second homes and investment properties qualify including single family detached dwellings, condos and townhomes.
  • one 30 day mortgage mortgage late allowed during the last 12 months IF it did not happen during the last 6 months.

If you would like me to provide you with a rate quote for your home located anywhere in Washington for a HARP refinance, click here

What if your scenario doesn't meet the criteria for HARP 2.0?  You do have some options.  FHA may be a consideration, however it does have both upfront and monthly mortgage insurance (which is increasing on June 11, 2012). Current non-conforming jumbo rates are very low, however they require equity of at least 15% (combined with a second mortgage).  

Congress is pushing for HARP 3.0 which would expand the above guidelines to allow more underwater home owners participate in the Home Affordable Refinance Program.  And President Obama is promoting his refinance plan which would allow mortgages that do not qualify for HARP (not securitized by Fannie or Freddie) to be refinanced using an FHA insured mortgage.  

If your home is located anywhere in Washington and you've been current on your mortgage payments, I'm happy to review your options. I have been originating mortgages at Mortgage Master Service Corporation for the last 12 years.  I'm required to provide the following language if I'm trying to solicit your HARP refinance – and if your home is anywhere in Washington state, I am!

Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.  

If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.

You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites:

www.freddiemac.com/mymortgage or

http://www.fanniemae.com/loanlookup/

 

 

Refinancing Your Seattle Area “High Balance” Mortgage Over $506,000

If you obtained a high balance mortgage over the current limit ($506,000 in King, Pierce and Snohomish Counties) and missed the opportunity to refinance before the loan amounts were reduced, you may still have some options worth checking out. Especially with Fannie Mae hinting that loan limits may be reduced further in just a few months, effective January 1, 2012. FHA loan limits may be further reduced in 2012 as well. We typically learn what 2012 limits will be in November.  The gap between yesterday's higher loan limits and conforming/FHA loan limits may actually widen in a few months making most of these scenarios tougher to obtain in 2012.

Conventional Financing

Consider a Jumbo/Non-Conforming Mortgage. Fixed rates or adjustable rate mortgages may be worth your consideration depending on your financial plans. Non-conforming mortgages are for well qualified borrowers and require a minimum credit score of 720 and a maximum loan to value of 80%. Loan amounts of $506,001 and higher are now considered a jumbo in King County as well as Snohomish and Pierce.

Cash In Refinance. Not happy with how your investments are doing in the stock market? Some home owners are electing to use their savings or investments in to bring their principal balance down to the conforming loan limit.

Piggy Back Second Mortgage.  We currently are able to go up to 85% of the appraised value with a second mortgage.  The loan amounts can be structured to keep the first mortgage at 80% of the loan to value and/or at the county high balance conforming limit. Home owners need to be well qualified with credit scores of 720 or higher.  HELOCs and amortized fixed rates are available.

FHA Loans. If your existing mortgage is an FHA loan, you may be in luck. Although FHA loan limits were reduced on October 1, they are allowing streamline refinances of the former temporary higher loan limits.  UPDATE: FHA LOAN LIMITS FROM NOV 18, 2011 – DECEMBER 2012 ARE $567,500 IN KING, PIERCE AND SNOHOMISH COUNTY.

VA Mortgage Loans. Unlike conforming and FHA loans, VA elected to not reduce their loan limits (technically the guarantee) for the remainder of 2011.  

With mortgage rates at a historic lows, it may be worth your time to contact a licensed mortgage originator to review your options. Whether or not you should refinance depends on your personal goals and financial scenario.  If your home is located anywhere in Washington, I'm happy to provide you detailed written rate quotes with no obligation.