sign showing what financing options are available

5 Ways to Buy a Million Dollar Home

The housing market has never sign showing what financing options are available had a period where the percentage of all-cash buyers are one-third of all purchase in loans under the jumbo loan limit.  With all the hoops borrowers have to jump through for conforming Freddie and Fannie Mae products, they simply paid cash.

In the non-conforming category, all-cash buyers represented 36% of residential properties bought in California,  What is normal is around 10 to 12 percent of all purchases going to cash buyers.

In 2013, cash buyers represented 30.5 percent of homes sold in San Diego, a tad bit under the 32.2 percent a year earlier.  Sales that required jumbo financing represented 31.2 percent of all loans in San Diego County in 2013,  an increase of 23.2 percent the previous year1. This is just not normal and something real estate experts can expect to change. However, 5-10% of cash buyers can be attributed to foreign buyers, namely Chinese investors.

For homes priced above $1M, some people are using their stock market gains to buy real estate, while others are doing it the traditional way with leverage.

Here are 5 methods to purchase a million dollar property

1.)  All Cash,  this is the strongest offer since there are no financing contingencies that will make it fall out of escrow.

Loan amount:  $0
Buyer’s down payment: $1,000,000

Buyer must use all cash and access liquid funds of $1,000,000 from their savings or brokerage account and show the seller a recent bank/brokerage statement that they have proof of funds.


2.)  Financing with  20% down, the traditional way and most recommended way to buy a home according to financial advisors.

Loan amount:  1st mortgage of $800,000
Buyer’s down payment to bring in:  $200,000

Buyers show pre-approval letter to seller; sometimes proof of funds is given to the seller’s listing agent especially in areas of high demand which receive multiple offers such as the coastal areas of California,  Washington, and Florida.


3.)  Financing with 5-10% down. Yes, this program does exist and it comes with NO Mortgage insurance which is normally required for financing over 80-percent of the property’s value.

Loan amount:  1st mortgage of $950,000 (or $900k for ten down)
Buyer’s down payment to bring in:  $50,000 – $100,000

Buyers need to only put down $42,500 and provide a pre-approval letter to the seller; sometimes proof of funds is given to the seller’s listing agent and other information upon request.


4.)  Financing with 10% down. Sure this program is available too.

      a.)  Loan amount:  $900,000
1st loan:  $625,000 – Fixed rate
2nd loan: 275,000  – HELOC prime rate + 2 =  5.25%

b.)  Loan amount:  $900,000
1st loan: $900,000  – ARM

Buyer’s funds to bring in: ONLY  $100,000.  Down payment may be less if you are able to pledge assets.


5.)  Seller Carry-back Financing

Loan amount: $800,000 –  typically sellers like 20% down
Rates:  when you go this route, sellers typically offer you a rate 2-4% above market rates.

   Pros: Not a lot of paperwork to provide to a lender.

   Cons: Interest rate is higher than if you went with traditional financing, and in some cases there is a balloon payment.

For more information on any of these financing programs,
contact Bill at
Omni Fund, Inc.

1. San Diego Union Tribe – Jan. 25th, 2014