Home Loans

Understading Jumbo Loans

Average home prices in the Bay Area can be quite high. Find out if a jumbo loan is the right option for you.

By SF Fire Credit Union

Jumbo Loan Limits 101

When you’re house hunting in the Bay Area, you’ll notice the sales prices can be quite high. According to Norada Real Estate Investments, in August 2021 the median price for a single-family home in San Francisco County was $1,850,000.

Given the stability of home values in general, a high selling price doesn’t make it impossible to get approved for a mortgage. However, prices above a certain threshold will impact the type of loan you can apply for and possibly increase some of the underwriting requirements for approval.

In other words, you might need to understand the difference between conforming and jumbo loan limits.


Conforming vs. Jumbo Mortgages

What’s a conforming mortgage? It’s a mortgage that falls within maximum size limits established by the Federal Housing Finance Agency. This limit can vary by county – for instance, in 2021, a conforming mortgage in San Francisco, San Mateo, or Marin County for a single family residence can be as high as $822,375, whereas in Sonoma County, the limit is $707,250, and in Sacramento County, $598,000.

Lenders are often able to sell conforming mortgages to Fannie Mae and Freddie Mac (while continuing to service the loans).This can impact how strict the underwriting guidelines need to be.

Jumbo mortgages exceed the dollar limit for loans that lenders can sell to the government. Some advantages of jumbo mortgages include:

  • More money to spend
  • Ability to purchase a larger home
  • Ability to purchase a home in the most desirable markets

The higher financing amount possible with a jumbo loan can get you where you need to be, but there may be stricter guidelines for approval.



Jumbo Mortgage Requirements

Given the size of the loan, and without the option of selling the loan to Fannie Mae or Freddie Mac, jumbo mortgages can carry a higher risk for the lender. While requirements will vary depending on the lender, when applying for a Jumbo Mortgage, you might see stricter requirements than you would for a conforming mortgage, such as:

  • Additional pricing adjustments based on FICO Score , loan-to-value ratio, and property type
  • Higher credit score requirements
  • Lower debt-to-income ratio (which may depend on cash reserves)
  • As noted above, additional cash reserves
  • More extensive documentation
  • Additional appraisals
  • Higher down payments
  • Higher closing costs


So when you’re evaluating your loan options, be prepared for additional requirements for a jumbo loan. However, SF Fire Credit Union loan officers may be able to offer you more flexible products than national lenders based on our understanding of the local market and the risk.



Don't assume higher interest rates

While you might assume that the risk of a jumbo mortgage would mean a higher interest rate, that’s not necessarily true. Rates can vary, so it’s important to shop for the best rates for jumbo loans.

Check Home Loan Rates at SF Fire Credit Union


Given the high prices for homes in many desirable markets in the Bay Area, it’s possible you’ll need a jumbo mortgage’s higher limits to get you over the threshold and into your perfect home. It’s important to be aware of the possible extra requirements you’ll need to meet for approval. Our Real Estate Officers have the local expertise to help answer questions you might have about whether a jumbo mortgage is right for you.