Are you eyeing a home in San Carlos or nearby Peninsula communities and wondering if your loan will be considered jumbo? You are not alone. With local prices often above conforming limits, jumbo financing is common here and it comes with different rules. In this guide, you will learn how jumbo loans work on the Peninsula, the current loan limits to watch, what lenders expect from you, and smart ways to keep your purchase on track. Let’s dive in.
What a jumbo loan means here
A jumbo loan is any mortgage that exceeds the conforming loan limit for your county and property type. Conforming loans can be purchased by Fannie Mae or Freddie Mac. Jumbo loans cannot, so private banks and investors set the rules.
On the Peninsula, many single-family purchases in San Carlos, Redwood City, Belmont, and parts of Santa Clara County exceed the conforming cap. That means you will often see higher credit standards, more documentation, and larger cash reserve expectations for jumbos compared to standard conforming loans.
Conforming limits for San Mateo and Santa Clara
The Federal Housing Finance Agency sets conforming loan limits each year. San Mateo County and Santa Clara County are treated as high-cost areas. For reference, the 2024 high-cost ceiling for a 1-unit property is $1,149,825. Multi-unit ceilings are higher: 2-unit $1,473,525, 3-unit $1,780,200, and 4-unit $2,211,600. Any loan above the applicable county limit is a jumbo. Always check the current year’s limits when you are ready to write an offer.
Quick Peninsula examples
- Example 1: San Carlos single-family at $2,000,000 with 20% down. Your loan would be $1,600,000. That is above the 1-unit high-cost ceiling, so it is a jumbo.
- Example 2: Single-family at $1,350,000 with 30% down. Your loan would be $945,000. In a high-cost county using the 2024 ceiling, that would be within conforming limits.
What lenders look for on jumbos
Jumbo underwriting is more conservative. Requirements vary by lender, but you can expect tighter credit standards, detailed documentation, and strong cash reserves.
Credit score and DTI ranges
- Credit score: Many programs seek 700 or higher. For larger loans or lower down payments, lenders may prefer 720 to 760.
- Debt-to-income ratio: Caps often fall between 43% and 50%. Some portfolio lenders will stretch for strong borrowers with significant assets.
Cash reserves most buyers need
Reserves are measured in months of PITI and are a key difference with jumbo loans.
- Primary residence: Expect around 6 months of reserves. Larger loans can require 6 to 12 months.
- Second home: Often 6 to 12 months.
- Investment property: Commonly 6 to 12 months or more at higher loan-to-value levels.
Documentation checklist
Prepare early to save time later. Lenders commonly request:
- Income and employment: Recent pay stubs, employer verification, and W-2s for the past 2 years. Self-employed buyers typically provide 2 years of personal and business tax returns plus year-to-date profit and loss.
- Assets and reserves: Two to three months of bank statements, plus retirement and brokerage accounts to document reserves. Some lenders request 6 to 12 months of statements to source large deposits.
- Credit and property: A full credit report, any needed explanations, the purchase contract, appraisal, and HOA documents if applicable.
- Other items: Gift letters, explanations for large deposits, or legal documents that affect income or obligations when relevant.
Down payment and mortgage insurance
- Down payment: Many jumbo programs require 10% to 20% down on a primary residence. Lower down options may exist but often require stronger credit and larger reserves.
- Mortgage insurance: Some jumbo programs do not use traditional private mortgage insurance. Others offer it with stricter standards and higher costs. A 20% down payment is a common way to avoid MI. Some buyers consider a second-mortgage piggyback. Each strategy has tradeoffs to discuss with your lender.
Options for complex income
If you are self-employed or have significant assets, specialized programs can help:
- Bank-statement programs: Use 12 to 24 months of bank statements to document income. These typically carry higher rates and stronger down payment requirements.
- Asset-based or asset-depletion programs: Convert liquid assets into a qualifying income figure using lender formulas.
Timeline and what to expect
Jumbo purchases commonly take 30 to 60+ days to close. Well-prepared files with experienced lenders can close in 30 to 45 days. If an appraisal is complex or the lender needs extra approvals, plan for 45 to 60 days.
Why jumbos can take longer:
- More documentation review, including asset sourcing and large deposit explanations.
- Appraisal complexity for unique Peninsula homes or limited comparable sales.
- Extra approval layers for large loan amounts.
- Rate locks: Jumbo buyers often select 45 to 60 day locks. Longer locks cost more, so discuss options like extended locks or float-downs if available.
Typical steps and timing:
- Preapproval: 1 to 3 days once documents are ready.
- Application and disclosures: 1 to 5 days.
- Appraisal: 7 to 21 days, sometimes longer in tight appraiser markets.
- Underwriting review: 7 to 21 days depending on file completeness.
- Clear to close and funding: 3 to 7+ days.
Lender options on the Peninsula
You have several paths, each with pros and cons.
- Bank or credit union portfolio lenders: Can be flexible for established clients and unique properties. They may hold loans on their books.
- National banks and correspondent lenders: Standard jumbo products with clear guidelines. Often efficient, sometimes more rigid.
- Mortgage brokers: Can shop multiple lenders and niche programs. Quality varies, so ask about jumbo experience and turn times.
- Non-QM and private lenders: Useful for complex financial profiles, with higher rates and fees.
- Private banking relationships: High-net-worth buyers may access relationship pricing, interest-only structures, or cross-collateral options.
Appraisals and Peninsula property nuances
Higher-priced homes in San Carlos and nearby markets can be hard to compare. Unique lots, design-forward remodels, or limited recent sales can slow the process or affect value.
How lenders manage appraisal risk:
- Selecting appraisers with local knowledge of micro-markets.
- Ordering a second appraisal in some cases.
- Capping loan amounts or increasing reserve requirements if the appraisal is weak relative to the purchase price.
Tips to strengthen your jumbo offer
For buyers:
- Complete a full-document preapproval with a lender experienced in jumbos before you shop.
- Gather two years of tax returns, several months of bank and investment statements, and explanations for large deposits.
- Keep revolving balances low and avoid new large purchases until after closing.
- Consider a larger down payment to reduce reserve needs and improve approval odds.
- Work with local professionals who understand Peninsula comps and HOA nuances.
For sellers evaluating jumbo-financed offers:
- Prioritize buyers with strong preapprovals that reflect jumbo underwriting, not just a basic prequalification.
- Build in sufficient time to close, often 45 days or more.
Risks and pitfalls to plan for
- Lender overlays: Some lenders add stricter requirements for certain property types or higher loan sizes.
- Appraisal shortfalls: Use appraisal contingencies, consider seller concessions, or plan additional down payment if needed.
- Rate lock expirations: Delays can increase costs. Choose a lock that matches your timeline and consider backup options.
- MI and product limits: Very large loans may limit MI options or require higher down payments.
- Unusual terms: Some very large jumbos involve cross-collateralization or other nonstandard structures. Review terms carefully.
Ready to move forward?
If you are considering a jumbo purchase or sale on the Peninsula, you want proactive planning, clean documentation, and confident negotiation. As a boutique advisor with deep local roots and a legal background in complex transactions, I help you navigate lender expectations, appraisal risk, and timelines without drama. Let’s align your financing strategy with your property goals and the realities of our market.
Have questions or want a tailored plan for your price point and timeline? Connect with Dana Rae Stone to get started.
FAQs
How do I know if my loan is jumbo in San Carlos?
- Calculate your loan amount by subtracting your down payment from the purchase price. If that loan exceeds your county’s current conforming limit for your property type, it is a jumbo.
What down payment do jumbo lenders usually require on the Peninsula?
- Many primary residence jumbos require 10% to 20% down. Lower options may exist but often require stronger credit and larger reserves.
What credit score and DTI do I need for a jumbo loan?
- A 700 score is common, and 720 to 760 may be preferred for larger loans or lower down payments. Debt-to-income caps often fall between 43% and 50%.
How much cash do I need beyond the down payment?
- Plan for closing costs and prepaids, plus reserves that often equal 6 months of PITI for primary homes. Larger loans or second homes can require 6 to 12 months.
Do jumbo loans have higher interest rates than conforming loans?
- It depends on the lender, investor demand, loan size, and your profile. Sometimes jumbos price higher. Favorable terms are more likely with strong credit and assets.
Can I get preapproved for a jumbo before shopping?
- Yes, and it is strongly recommended. A full-document preapproval strengthens your offer and helps you set realistic timelines.
Are there options for self-employed or high-asset buyers?
- Yes. Bank-statement and asset-depletion programs can work for complex income, typically with higher rates, stronger down payments, and larger reserves.
