Conventional loans are the most widely used mortgages in the country, and jumbo loans extend that financing to higher-priced homes. In Southern California, knowing where one ends and the other begins can shape your whole purchase.
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What It Is
A conventional loan is a mortgage that is not insured by a government agency. Most conventional loans are conforming, meaning they meet the guidelines and loan-size limits set for loans purchased by Fannie Mae and Freddie Mac.
A jumbo loan is a mortgage larger than the conforming loan limit. Limits are set each year by the Federal Housing Finance Agency and are higher in high-cost counties such as Los Angeles and Orange County. Because jumbo loans are larger, lenders typically look for stronger credit, larger down payments and more cash reserves.
Who It Is For
- Buyers with good credit and stable, documented income.
- Buyers who can put 20% down and want to avoid mortgage insurance.
- Buyers purchasing above the conforming loan limit in their county.
- Homeowners refinancing a higher-balance loan.
Key Features
How to Qualify
- Credit: conventional loans generally require stronger credit than government programs, and better scores usually earn better pricing.
- Debt-to-income: lenders compare your monthly debts, including the new payment, with your income.
- Down payment: jumbo loans commonly require more down than conforming loans.
- Reserves: jumbo lenders often want several months of payments in savings after closing.
Common Questions
How do I know if I need a jumbo loan?
If your loan amount is above the conforming limit for the county where the home is located, you will need a jumbo loan or a larger down payment. We will check the current limit for your area.
What is private mortgage insurance?
PMI protects the lender when you put less than 20% down on a conventional loan. It adds to your payment, but it can generally be removed once you build enough equity.
Are jumbo rates always higher?
Not necessarily. Jumbo pricing varies by lender and borrower profile, which is one reason comparing lenders through a broker can help.
Find your conventional or jumbo option.
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Innovative Mortgage Solutions, NMLS #2302211. David L. Tripp II, NMLS #362229. Licensing can be verified at NMLS Consumer Access.
Equal Housing Opportunity. This is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines, property eligibility and program availability. Program features described here are general and may vary by lender; terms are subject to change without notice.