Jumbo Loans California
Live your big-city dreams in comfort with a California jumbo loan! These large loans are great for luxury primary residences, vacation homes, and investment properties. If you're ready to qualify for a jumbo loan, get in touch with your helpful mortgage professionals at District Lending!
The average California home costs approximately $786,300, and the California Association of Realtors believes it’s only going to get larger from here — house prices are expected to jump 6.3% this year. Given that the conforming loan limits for a single-family home in most California counties are just $766,500, many seeking a comfortable lifestyle are turning to jumbo loans.
Not every mortgage lender offers this specialized product, but District Lending is proud to provide jumbo loan mortgages for qualified buyers. We offer competitive loan rates and an easy qualification process.
California Jumbo Loan Statistics
With the high price of real estate in most counties of California, jumbo loan products are more common here than in other states. In California, the average jumbo loan is between $2 million and $3 million.
The conforming loan limits for all counties in California rose by about 5.56% this year, a little bit below the rise in median home prices statewide. This is good news, because over 64% of homes in the state cost over $1 million in 2023.
get a FREE quoteThe conforming loan limits for all counties in California rose by about 5.56% this year, a little bit below the rise in median home prices statewide. This is good news, because over 64% of homes in the state cost over $1 million in 2023.
Qualifying for a California Jumbo Loan
A jumbo loan has much stricter requirements than conventional loans because there is more risk to the lender: the higher the loan amount, the more likely that a borrower will default.
Additional expenses beyond the monthly payments, such as property tax (0.71% on average in California) and homeowners insurance, also increase the burden on the borrower and put them at risk of being unable to pay for their home loan.
Also, the government-sponsored entities, Fannie Mae and Freddie Mac, don’t insure or guarantee these loans. That makes it difficult for the lender to recoup their losses, so most lenders take great precautions when approving these high-cost loans.
Requirements will vary depending on the lender, but you need to have a very strong borrower profile. Get all of your financial information in order before you get in touch to start the jumbo loan mortgage process.
Jumbo Loan Limits
Each year, the Federal Housing Finance Agency (FHFA) sets conforming loan limits for all counties in the United States. Loans below the conforming loan limits can be purchased as bundled mortgage loans in the secondary mortgage market by Fannie Mae and Freddie Mac, which are regulated by the Federal Housing Finance Agency (FHFA). Those above the jumbo loan limit cannot. This makes it difficult for lenders to offload jumbo loans, and therefore, it’s harder to qualify for a jumbo loan.
The conforming loan limit is set by county, and it varies greatly depending on which area of California you are in. Here are the single-unit conforming loan limits for some of the most popular Californian counties:
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Fresno – $766,550
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Humboldt – $766,550
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Los Angeles – $1,149,825
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Orange – $1,149,825
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Napa – $1,006,250
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Sacramento – $766,550
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San Francisco – $1,149,825
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San Diego – $1,006,250
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Liquid Assets
Due to the fact that a jumbo loan is riskier than a conventional loan, jumbo lenders will expect a higher down payment amount, as this protects them. Many lenders expect 20% down payments, and they’ll often expect at least six months of cash reserves for mortgage loan payments, homeowners insurance, and property taxes. Don’t forget about the closing costs, which are also super-sized with a jumbo loan.
Strong Credit History
You’ll need a higher credit score than you would with conforming loans, showing that you can handle expenses above the jumbo loan limits. Whereas you might be able to get away with a 620 credit score when buying houses within the loan limits set by the FHFA, you will typically need at least a 700 credit score for a jumbo loan. If we look at the average credit score in California, it’s not impossible — the FICO score averages at 722.
Low Debt-to-Income Ratio
Additionally, jumbo lenders want to see a high gross monthly income and a low debt-to-income ratio. With a mortgage below the conforming loan limits, lenders will typically accept a DTI between 40% and 50%, but you may not qualify for a jumbo mortgage loan if you have a DTI above 36%. Be sure to pay off all those credit cards before you explore loan options.
Property Appraisals
Lastly, jumbo loans necessitate a property appraisal, often more than one. Lenders want to see that the home is comparable with the median home price in the area before they’re willing to approve such large loan amounts. This also ensures that you’re not getting a raw deal before you provide a larger down payment and accept the higher jumbo loan mortgage rates.
California Jumbo Loan Total Amount and Payments
How much you pay for jumbo mortgages depends partly on your borrower profile and partly on the prevailing market conditions. You should be aware of the general trends in interest rates for jumbo loans and understand what's expected of you in terms of a down payment.
Interest Rate
Jumbo loan rates are higher than conforming loan rates. However, you can snag a lower interest rate that’s closer to the baseline limit if you have a very strong borrower profile, such as a higher credit score. You will also need to choose between adjustable-rate mortgages and fixed-rate mortgages, and terms between 15 and 30 years.
Down Payments
Part of the high cost of jumbo loans is their upfront investment. Most lenders expect you to provide at least 20% of the total loan amount as a down payment, whereas you might only need 10% or 15% on a conforming loan. On the plus side, you don’t need to pay for monthly mortgage insurance premiums.
For example, if home prices are approximately $860,000, you will have to offer at least $172,000 upfront. The more you offer, the lower your interest rates and the faster you can pay off your loan.
Talk With District Lending About Jumbo Mortgage Loans in California
Jumbo loans, those above the conforming loan limit, are an increasingly popular option across California due to the high cost of housing here. They can be used for a second home, investment property, or primary residence, depending on your specific goals.
District Lending is one of an elite group of lenders who offers jumbo mortgage products in addition to conforming loans. Contact us today to learn more about our products and whether jumbo loans are the right choice for you.
We believe trust is critical in the mortgage process, so feel free to ask us any questions you may have about mortgage rates, the conforming loan limit, or how much home you can afford. We look forward to helping you in your dream home search!
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