A jumbo loan in California is a type of mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). These limits vary by county and market areas within California. For most counties in 2024-2025, the conforming loan limit for a single-family home is about $766,550 to $806,500. However, in high-cost areas like Los Angeles, San Francisco, and San Jose, the conforming loan limit can be as high as $1,149,825 to $1,209,750. When a mortgage amount exceeds these limits, it is considered a jumbo loan. Jumbo loans cannot be guaranteed by government entities like Fannie Mae or Freddie Mac due to their larger size. Because of this increased risk to the lender, jumbo loans typically have stricter qualification requirements, such as:
- Higher credit scores (usually 700 or above, often 720 or higher)
- Larger down payments, typically 10% to 20% or more
- Low debt-to-income ratios
- Substantial cash reserves to cover several months of mortgage payments
Jumbo loans often come with slightly higher interest rates compared to conforming loans, to compensate lenders for the increased risk. They are common in California due to the generally high real estate prices, especially in major metro areas. In summary, a jumbo loan in California is a mortgage for homebuyers who need to borrow more than the conforming loan limits set by the FHFA for their specific county or high-cost area. If you are buying a home with a mortgage exceeding these limits, you will likely need a jumbo loan and should be prepared for the associated stricter lending criteria. This is the key definition and context for jumbo loans in California as of 2024-2025. Let me know if you want details on specific counties or loan requirements.
