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What Is A Jumbo Loan In California?

What Is A Jumbo Loan In CaliforniaWhat Is A Jumbo Loan?

jumbo loan is a conventional (not government-insured) mortgage loan that exceeds the conforming size limit for sale to Fannie Mae and Freddie Mac, the two government-sponsored enterprises (GSEs) that buy and sell bundled mortgage loans. These limits vary by county. For most counties in the Bay Area, the 2021 conforming loan limit is $822,375, so any loan amount that is greater than $822,375 is considered a jumbo loan. Individual counties like Solano County and San Joaquin county, have lower jumbo loan limits.

What Is The Specific Jumbo Loan Amount In California?

This depends on the county where the home is located.

We’ve linked to the conforming loan limits for single-family homes across different counties across California where you can look up what the loan limit is in your county. 

Any loan amounts above these county loan limits will be considered jumbo mortgages. For example, in San Francisco, California, a single-family jumbo loan is one that exceeds $822,375 (the current conforming limit for that area). 

In general, mortgage qualification criteria can be stricter for jumbo loans simply because of the higher risk associated with the larger loan amount. Borrowers looking for homes that will require larger mortgages should have good credit, stable income, and a manageable level of debt.

How Jumbo Loans Relate To Home Prices

As you may have concluded, jumbo non-conforming loans are mostly used by those purchasing higher-end or “luxury” properties. By design, conforming loan limits are usually set higher than the median home price within a particular county. In theory, this gives homebuyers plenty of properties to choose from without venturing into the jumbo mortgage realm.

Exceptions

As always, there are often exceptions, sometimes loan limits and home values do not follow the practice as mentioned above. Unfortunately, high population areas that are seeing tremendous growth in the demand for housing will often see high home prices as well.

In Alameda County, where desirable cities like Oakland and Berkeley are located, the median home value was around $943,675 in November of 2020, according to Zillow. However, the conforming loan limit for the county is currently $822,375. 

Depending on the size of a down payment a borrower would either be eligible for a conventional loan product, with a down payment of 15% or more, or need to pursue jumbo financing if the anticipated down payment is less than 15% of the purchase price. Typically jumbo down payments can be as little as 10.01%, but there are many factors to consider when getting a mortgage that can affect your rate and loan. 

Next Steps?

If you’re thinking about obtaining jumbo financing or have additional questions about what loan products you may qualify for, you can reach our team here, by phone at (855) 855-4491, or by email at jvmteam@jvmlending.com.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167