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Is There a Government-backed Jumbo Loan?

Many government-backed mortgages are designed for moderate- and low-income borrowers. The U.S. Department of Agriculture loan program has strict income limits that make it virtually impossible to qualify for a jumbo loan because you won't pass the DTI test.

The Federal Housing Administration loan requires PMI for the life of the loan, so using a piggyback loan to bring the balance down to conforming loan limits doesn't make financial sense. Borrowers would be better served with a non-FHA loan product.

The U.S. Department of Veterans Affairs program, however, can be used for a jumbo loan. The VA will insure the portion of your loan that falls under conforming loan limits. The down payment requirement is based on the portion of the loan that is above the conforming loan limit. If you want to borrow $500,000, for example, you will need to make a down payment of $11,725 (25 percent of the amount that exceeds the conforming loan limit of $453,100). This loan is available from some lenders with zero down and no PMI.

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