Mortgage lenders classify maximum loan amounts into both conforming and jumbo. In most parts of the country, these limits are fairly straightforward. The most common conforming loan limit in the United States is $453,100 and anything above that is considered a jumbo loan. Conforming loans generally have slightly lower interest rates compared to the jumbo product. Each year, new conforming loan limits are set and based upon any increase of the national average home value. If there is an increase over the previous year in value, the conforming loan limit will be adjusted accordingly.
In California however, basic conforming and VA loan limits can vary from just $453,100 and beyond due to the various population densities, median income, and home prices. While most counties in California follow the $453,100 limit, in higher priced areas such as San Francisco, Orange County, Los Angeles, the conforming loan limit is increased to $679,650. Still, other counties have maximum conforming loan limits set slightly lower depending on where the property is physically located. Read more about new 2018 conforming mortgage limits.
In some situations where the sales price of the home appears to warrant a jumbo loan, buyers often have a choice to take out two loans instead of one. In this fashion, the first mortgage would be at the maximum conforming loan limit along with a lower interest rate. The second mortgage would be the difference between 20 percent down and the actual down payment from the borrower. This combo loan structure often results in a lower overall monthly payment compared to a single jumbo loan. However, it’s important to run this scenario with your loan officer to see if two loans do in fact make better sense than a jumbo loan. Both single loan and combo loan options are available with no mortgage insurance costs.
As for the down payment requirements, there currently is no 100% jumbo loan programs available. However, qualified buyers do have an assortment 5% or 10% down options with great terms. With a 5% down payment, the maximum jumbo loan amount is $2.0 million and with 10% down the maximum is $3.0 million for qualified home buyers in California. Please read all the requirements under the jumbo loan page.
Also, Veterans with proper eligibility and entitlement have higher balance VA Jumbo mortgages available throughout California. Vets can read up more on the VA Jumbo Mortgage here.
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