Mortgage

Jumbo buyers beat the system, lean on downpayment assistance

Shared appreciation allows outside firms to front-end deals

Homeowners acquiring properties in the high six-figure range have found a way to get around today’s higher downpayment requirements for jumbo loans, without having to put more of their own cash on the line.  

As Bloomberg’s Jody Shenn and Heather Perlberg report, companies, like FirstRex, are now giving jumbo buyers part of their downpayment in exchange for a percentage of any gains made on the property as values go up. The strategy is explained in Bloomberg-Businessweek:

“Jeff Uter would have needed to sell stocks or pull cash out of his consulting business to afford the down payment on a $780,000 home in Orange County, California. Instead, he paid half of the 20 percent required and got the other $78,000 from San Francisco-based FirstRex. In exchange, the real estate investment firm will get 40 percent of any gains in the value of Uter’s 4-bedroom condo in a golf
course community.”

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3d rendering of a row of luxury townhouses along a street

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