Real Estate Lending in Coconino County for homes over $510,000

Jumbo loans are no longer available and have not been for a few weeks. I sound like a broken record but lenders are looking for ways to mitigate risk and they individually but collectively decided to stop offering any loan amount great than $510,400 in Coconino County. The jumbo loan limit is based on county statistics and happens to be $510,400 for Arizona counties. Markets like Northern California, for example, with significantly inflated real-estate values have county jumbo limits in excess of $750,000.

What this means for your client that is purchasing a house in excess of the jumbo limits:

$650,000 purchase price

10% down – $65 K

Loan amount = $585,000 which is now a non-conforming loan amount

Cash-to-close = $75,000 plus typical closing costs

Actual Loan Amount = $510,000 (conforming loan amount)

The loan amount must be brought down below $510,400 with cash at closing/down payment.

When I am writing pre-qualification letters for a scenario like the above illustration the pre-qual is calculated on a loan amount of $510K regardless of the purchase price due to the new guidelines. Bottom line is that buyers need to put enough money down to decrease loan amount to at least $510,400.

We will see the jumbo products return to the market, just not sure when and what changes may accompany their return.