Full Doc Isn't Always the Best Option: Comparing Three Loans on a $1,250,000 Home
It's easy to assume that a borrower with good taxes and good bank statements should always choose a full-documentation conventional loan. This success story shows why comparing options side by side can lead to a very different, and better, answer.
The scenario
A self-employed buyer was purchasing a $1,250,000 home with 80% financing and a 740 FICO score. They had good taxes and good bank statements, so on paper they qualified for several programs.
The challenge
Having options is great, but the "obvious" choice isn't always the right one. The question was which structure would deliver the best combination of cash needed, monthly payment, and overall fit.
How it was structured: three options compared (example rates)
Conventional (conforming): Home price $1,250,000; down payment $417,250 (33.38%); loan amount $832,750; interest rate 7.00%; monthly principal and interest $5,540; no PMI.
Jumbo (non-conforming): Home price $1,250,000; down payment $250,000 (20%); loan amount $1,000,000; interest rate 7.26%; monthly principal and interest $6,829; no PMI.
Bank Statement (12–24 months), for self-employed borrowers: Home price $1,250,000; down payment $250,000 (20%); loan amount $1,000,000; interest rate 6.50%; monthly principal and interest $6,321; no PMI.
The result
The conforming loan required a down payment of more than $417,000 to stay within conforming limits. The jumbo kept the down payment at 20% but came with the highest rate and payment. In this example, the bank statement option kept the 20% down payment and offered the lowest rate, 6.50%, with a monthly payment about $500 lower than the jumbo, all with no PMI. Full doc was not the best option for this buyer.
The lesson
The right solution makes all the difference. Don't stop at the first program a borrower qualifies for. Compare cash to close, rate, and payment across every eligible option. More options mean more opportunities.
Want to see your own side-by-side comparison? Apply at our online portal or book a consultation at calendly.com/lorenacolin.
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