Jumbo Loans on the Peninsula: Limits and Strategy

Shopping for a home on the Peninsula and not sure if your mortgage will be jumbo? You are not alone. With local prices, many buyers discover that loan type and limit strategy can shape both monthly costs and offer strength. In this guide, you will learn how jumbo loans work, how county limits affect you, and the smart steps to get fully prepared before you write an offer. Let’s dive in.

Jumbo vs. conforming: what it means

A conforming loan meets the Federal Housing Finance Agency rules so it can be purchased by Fannie Mae or Freddie Mac. In high-cost counties, a larger high-balance conforming ceiling may apply and still count as conforming. A jumbo loan is any loan amount that exceeds the county’s conforming limit.

How limits are set

The FHFA updates conforming loan limits each year. Certain high-cost counties, including many across the Peninsula, have higher ceilings. Because limits can change, you should always confirm the current year’s county limits before you set your budget.

Loan amount vs. price

Jumbo status depends on loan amount, not just the price. Use the simple formula:

• Loan amount = Purchase price − Down payment

If your loan amount is over your county’s conforming ceiling, your loan is jumbo.

Where to check limits

Use the current FHFA conforming loan limits and county list for San Mateo, Santa Clara, and San Francisco. Recheck limits early each year to avoid surprises.

Where jumbo starts on the Peninsula

The Peninsula’s median prices are well above national averages. That means many typical purchases land in jumbo territory unless you make a larger down payment or use a second lien.

County differences to watch

Conforming and high-balance ceilings vary by county. San Mateo, Santa Clara, and San Francisco may not have the same cap. Run the math by county when you target a neighborhood so you know exactly where your loan type lands.

Simple math examples

These examples are for illustration. You must compare your results to the current county limit.

• $1.5M price with 20% down equals a $1.2M loan. In many counties, that is likely jumbo.
• $1.2M price with 35% down equals a $780k loan. That could be conforming in some high-cost counties, but jumbo in others.

Why this matters in a competitive market

Knowing your loan type in advance informs your appraisal and loan contingencies, your close timeline, and how sellers view your financing strength. A fully underwritten pre-approval helps you move faster and can give your offer more credibility.

How jumbo underwriting differs

Conforming loans rely on standardized agency rules. Jumbo loans follow lender-specific guidelines and often require stronger files.

• Credit score: Best jumbo pricing often goes to higher scores, commonly 720 and above. Some lenders allow lower scores with higher costs.
• Debt-to-income: Conforming can be flexible with automated approvals. Jumbo often favors lower DTI ranges, such as 36% to 43%, with exceptions for strong reserves or credit.
• Reserves: Conforming may need none to a few months of PITI. Jumbo commonly requires several months, often 6 to 12 months, and that can increase with loan size or property type.
• Loan-to-value: Conforming allows higher LTV with private mortgage insurance. Jumbo programs may allow up to 90% LTV in niche cases, but most favor larger down payments and strong reserves over PMI.
• Documentation: Jumbo lenders can offer flexible programs, such as bank statement or asset-based options, but they come with tighter rules and pricing.
• Assets and seasoning: Expect close review of large deposits, gift funds, and transfers. You will need full paper trails and formal gift letters.
• Appraisal and property: Appraisals may be more conservative or more detailed. Non-warrantable condos and unique homes can be harder to finance, though some jumbo programs will consider them.
• Underwriting style: Conforming uses automated engines that speed approvals. Jumbo is often manual review, which can take longer.
• Rates and pricing: The rate spread between jumbo and conforming moves with market conditions. Sometimes jumbo is higher, sometimes it is similar or even lower. Pricing depends on credit, LTV, property type, and occupancy.

Rate, product, and lender strategy

Decide conforming vs. jumbo

Run side-by-side scenarios for your target price points and down payment options. Compare the tradeoff between putting more cash down to stay conforming versus keeping more liquidity and taking a jumbo. Consider your comfort with reserves and how quickly you want to close.

Choose the right lender set

Jumbo pricing and guidelines vary widely. Shop 3 to 5 options, such as large banks, regional banks, credit unions, and brokers. Portfolio lenders that keep loans on their books may offer relationship pricing or flexible programs that fit Peninsula buyer profiles, including self-employed income.

Fixed vs. ARM, lock timing, and points

• Fixed-rate jumbos offer payment stability and are helpful if you plan to hold the loan longer.
• ARMs, such as 5/1 or 7/1, can have lower initial rates. They work well if you expect to refinance or move before the fixed period ends.
• Rate locks matter in a moving market. Confirm lock length, any float-down options, and how changes affect points.
• Points vs. rate should be a math decision. Calculate break-even based on how long you plan to keep the loan.

Alternatives that may lower cost

• Piggyback combo: A conforming first plus a second lien can help you avoid a full jumbo. Compare combined costs and complexity to a single jumbo.
• Bridge loans or HELOCs: Useful if you plan to sell another home soon and need temporary funds to adjust your down payment.
• Relationship lending: Large deposits or private banking can unlock custom jumbo terms.

Appraisals, timelines, and costs

Jumbo appraisals can require more scrutiny. Unique homes or new construction may add time. Expect the potential for higher appraisal fees, larger reserve requirements, and different pricing for second homes or investment properties.

Pre-underwritten pre-approval checklist

A fully underwritten pre-approval shows sellers you are serious and can shorten contingencies. Ask lenders for a full-doc pre-underwrite before you tour.

Personal identification

• Government-issued photo ID
• Social Security number for a credit pull

Income documentation

• W-2 employees: last 2 years of W-2s and 30 to 60 days of pay stubs
• Self-employed: last 2 years of personal and business tax returns, year-to-date P&L and balance sheet, business bank statements
• Commission, bonus, or other income: 2 years of history and recent documentation
• Retirement or investment income: 1099s, account statements, and distribution schedules

Assets and reserves

• Last 2 to 3 months of bank statements for all accounts
• Investment, brokerage, and retirement statements if used for funds or reserves
• Paper trails for large deposits and transfers
• Gift funds: formal gift letter, donor statements, proof of transfer, and confirmation there is no expectation of repayment

Property and transaction

• Accepted purchase agreement and all addenda
• HOA documents for condos or PUDs and preliminary title
• Explanations for any unusual items, such as gaps in employment

Credit and liabilities

• Authorization for a credit report
• Letters of explanation for disputes, inquiries, or derogatory items

Other requirements

• Proof of required reserves in liquid accounts
• 4506-C for tax transcript verification
• Verbal or written employment verification
• Insurance information once in contract
• For second homes or investments: lease agreements and added reserves

Timeline and process expectations

Full pre-underwriting can take several days to a few weeks, depending on complexity and lender workload. It is different from a light pre-qualification. After appraisal and final review, the lender issues a clear-to-close. Doing the heavy lifting before you shop can reduce your financing contingency.

Practical tips to strengthen your file

• Keep a clean, well-documented asset trail for any large deposits.
• Avoid new credit inquiries and large purchases during underwriting.
• Do not change jobs if you can avoid it. If you must, provide an offer letter and start date.
• Prepare short, clear letters to explain any irregularities.
• Choose a lender that regularly closes jumbo loans on Peninsula properties.

Smart questions to ask lenders

• Which jumbo programs fit my profile, such as fixed, ARM, interest-only, bank statement, or physician options?
• What are your credit score, DTI, LTV, and reserve requirements for my loan size and property type?
• Do you have guideline overlays and how do they affect me?
• From full documentation to commitment, how long does underwriting take?
• What is required for gift funds or proceeds from recent asset sales?

A quick plan for Peninsula buyers

1. Set your target price band and neighborhoods by county.
2. Use the loan amount formula to test down payment scenarios and see if you can stay conforming or if jumbo makes more sense.
3. Shortlist 3 to 5 lenders that actively fund jumbo loans on the Peninsula and compare terms.
4. Get fully underwritten before touring so you can move fast when you find the right home.
5. Choose a product and lock strategy that fits how long you plan to hold the loan.
6. Align your appraisal and financing contingencies with your lender’s actual timelines.

Buying on the Peninsula is competitive, but you can approach it with clarity and confidence. If you want help pressure-testing your scenarios and tailoring an offer strategy that fits the neighborhood and property type, reach out to a local expert who does this every week. Connect with Debbie Lamica to map your financing approach and win the right home on the right terms.

FAQs

What is a jumbo loan for Peninsula buyers?

• A jumbo loan exceeds your county’s conforming limit, which is set each year by the FHFA and can be higher in designated high-cost counties.

How do I know if my loan will be jumbo?

• Calculate loan amount as price minus down payment and compare it to your county’s conforming ceiling; if it exceeds the limit, it is jumbo.

Are jumbo rates always higher than conforming?

• Not always; the spread changes with market conditions, and pricing depends on credit, LTV, loan features, and property type, so shop multiple lenders.

How much down payment do jumbo lenders usually want?

• Many programs price best at 20 percent down or more, though some allow 10 to 15 percent with stronger reserves and credit at higher cost.

How many months of reserves do jumbo loans require?

• Many jumbo programs need several months of PITI, often 6 to 12 months, and larger loans or certain property types can require more.

Can I avoid jumbo with a piggyback loan?

• Yes; a first conforming loan plus a second lien can keep the first under the limit, but compare total costs, rates, and complexity to a single jumbo.

Do jumbo loans allow refinancing later?

• Yes; both rate-and-term and cash-out options exist, though cash-out jumbos often have stricter requirements and pricing.

Are there jumbo options for self-employed or high-asset buyers?

• Yes; some lenders offer bank statement, asset-depletion, physician, or portfolio programs, but terms and availability vary and can cost more.