What Is a Jumbo Loan in California? County Limits Explained

A jumbo loan is a type of mortgage that exceeds the conforming loan limits set by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac. A loan that surpasses these thresholds cannot be sold to these entities and must instead be held on the lender’s books or sold to other private investors, which often leads to different underwriting standards. These limits are not uniform across the United States; they vary significantly by location, particularly in areas with higher housing costs, such as many parts of California.

Understanding Jumbo Loan Limits in California

Conforming loan limits are established annually by the Federal Housing Finance Agency (FHFA) to reflect changes in average home prices across the country. For 2025, the baseline conforming loan limit for a single-unit property in most areas of the U.S. is $806,500. Any mortgage amount above this figure, in a standard market, is generally considered a jumbo loan.

California is home to numerous “high-cost areas” where median home values substantially exceed the national average. In these designated regions, the FHFA sets higher conforming loan limits, which can be as much as 150% of the baseline limit. For 2025, this means that in many high-cost California counties, the conforming loan limit for a single-unit property can reach $1,209,750.

The specific loan limit for a property depends entirely on its county location within California. For example, while many counties adhere to the baseline $806,500 limit, counties such as Los Angeles, San Francisco, Alameda, Contra Costa, Marin, Orange, San Benito, San Mateo, and Santa Clara have a higher limit of $1,209,750. Other counties, like Monterey, Napa, San Diego, San Luis Obispo, Santa Barbara, Santa Cruz, and Sonoma, may have unique limits falling between the baseline and the highest high-cost limit. A loan is classified as “jumbo” only if it exceeds the specific conforming limit applicable to the property’s county in California.

Qualification Requirements for Jumbo Loans

Qualifying for a jumbo loan involves meeting more stringent financial criteria compared to conforming mortgages, reflecting the increased risk lenders assume for larger loan amounts. Lenders assess a borrower’s financial stability and capacity to repay the loan.

A strong credit score is expected, often 700 or higher, with some lenders preferring 720 or 740 for better terms. The credit report should demonstrate a history of responsible credit management, free from recent late payments or collections. Lenders also scrutinize the debt-to-income (DTI) ratio, which compares monthly debt payments to gross monthly income. While some lenders may allow a DTI up to 43%, many prefer a lower ratio, sometimes capped around 36% or even lower for larger loan amounts, to ensure sufficient disposable income for the mortgage.

A substantial down payment is a prerequisite for jumbo loans, often ranging from 10% to 20% or more of the purchase price, depending on the loan amount and specific lender policies. Lenders commonly require borrowers to demonstrate significant liquid cash reserves after closing, often equivalent to 6 to 12 months of mortgage payments. This provides a financial cushion, assuring the lender the borrower can meet obligations even during unexpected financial fluctuations.

Stable income and employment history are paramount, with lenders seeking a consistent two-year employment track record.

Preparing for a Jumbo Loan Application

Before submitting a jumbo loan application, borrowers must gather a comprehensive set of financial documents and information. This preparation ensures a smoother process and allows lenders to assess eligibility.

For income verification, borrowers should prepare recent pay stubs, W-2 forms from the past two years, and complete tax returns for the last two years. Self-employed individuals will need to provide additional documentation, such as business tax returns, profit and loss statements, and potentially business licenses. To verify assets, bank statements for checking, savings, and investment accounts are required, often covering two to three months. Statements for retirement accounts, such as 401(k)s, may also be requested to confirm available reserves.

Lenders will require authorization to pull the borrower’s credit report, which provides a detailed history of credit obligations and payment behavior. Information regarding existing debts, including other loans and credit card balances, will also need to be provided. For the property itself, details such as the address and the executed purchase agreement are necessary. Organizing these documents in advance is crucial, as lenders conduct an in-depth review.

The Jumbo Loan Application Process

Once all necessary financial information and documentation have been gathered, the jumbo loan application process unfolds through several distinct stages. This sequence ensures thorough evaluation by the lender.

The process often begins with pre-qualification or pre-approval, where a lender provides an initial assessment of borrowing capacity. This step offers a preliminary understanding of borrowing capacity and demonstrates financial readiness to sellers. After this initial assessment and finding a property, the formal application is submitted, often through an online portal, though in-person or mail options may also be available.

Following submission, the application moves into the underwriting phase, which is more rigorous due to the larger sums involved. Underwriters meticulously review all provided documentation, including income, assets, credit history, and debt obligations, to confirm adherence to lending guidelines. An appraisal of the property is mandatory to determine its market value; a second appraisal might be required for very large loans.

After the rigorous review and property evaluation, if all conditions are met, the loan receives final approval. The concluding step is closing, where all legal documents are signed, and the loan is funded, transferring ownership and completing the financing process.