How Jumbo Loans Work on the Peninsula

Shopping for a home in Millbrae or anywhere on the Peninsula and seeing prices that outpace standard mortgages? You are not alone. In San Mateo County’s high‑cost market, jumbo loans are common, even for modest single‑family homes and condos. In this guide, you will learn exactly how jumbo loans work here, what lenders expect, how rates are set, and how to prepare a clean, competitive file. Let’s dive in.

Jumbo loans on the Peninsula

A jumbo mortgage is any first loan amount above the county’s conforming loan limit set by the Federal Housing Finance Agency. Conforming loans can be sold to Fannie Mae or Freddie Mac, while jumbos cannot and are usually kept or securitized by other investors. Because San Mateo County is a high‑cost area, many Peninsula purchases exceed the conforming cap and fall into jumbo territory.

What does that mean for you? You will see different underwriting expectations, more documentation, and sometimes different rate options than conforming loans. For example, a $2,000,000 purchase with 20% down creates a $1,600,000 mortgage. That is a jumbo in any county where the conforming limit is below $1,600,000.

What lenders expect

Credit and DTI

Lenders give jumbo files more scrutiny. Many look for FICO scores of 700 to 740 or higher for the best pricing. Lower scores can qualify with stronger terms elsewhere, but you may see higher rates or a lower maximum loan‑to‑value.

Debt‑to‑income ratios are often tighter. Many lenders prefer 43 to 50 percent for well‑qualified borrowers. Strong compensating factors such as high cash reserves or a low LTV can help.

Down payment and LTV

For primary residences, you will typically find options up to 80 to 90 percent loan‑to‑value on select programs. More common offerings expect 10 to 20 percent down. Lower LTV usually earns better pricing and more flexibility.

For second homes or investment properties, lenders often cap LTV around 70 to 75 percent and require more reserves. That is worth planning for if you are buying a weekend place or a rental.

Reserves and assets

Expect higher reserve requirements in San Mateo County. Many jumbo programs want 6 to 12 months of PITI, which includes principal, interest, property taxes, and insurance. Some scenarios, larger loans, or alternative documentation programs can require 12 to 24 months.

Lenders also review where your funds came from and how long they have been in your accounts. Large deposits need to be sourced and documented. Plan to provide 60 to 90 days of bank statements, and more for bank‑statement programs.

Income documentation

Salaried borrowers typically provide two years of W‑2s and tax returns, plus recent pay stubs. Self‑employed borrowers usually provide two years of personal and business returns, and a current profit and loss. Alternative documentation options, such as bank‑statement or asset‑qualified jumbos, exist but often come with higher rates and reserve needs.

Appraisal and closing timeline

High‑value appraisals on the Peninsula can take longer because there are fewer direct comparable sales. Plan for a full interior and exterior appraisal, and sometimes a second review for larger loans. If the property is unique or comparable sales are thin, lenders may ask for extra market support.

For condos, lenders often require project documentation and a project review. If a project is not considered warrantable under certain investor rules, it can limit options or affect pricing. The extra review is common and simply part of protecting both you and the lender.

Most California jumbo purchases close in 30 to 45 days. Extra document requests, appraisal re‑work, or title items can add time. Build in a little cushion in your contract and keep communication frequent.

Rates and lender choices

Jumbo rates are set by broader capital market forces rather than the conforming mortgage‑backed securities market alone. In calm markets, jumbo rates are sometimes close to conforming rates. In tighter markets, the spread can widen. Your pricing also depends on your credit score, LTV, documentation type, and whether you choose a fixed or adjustable product.

You have several lender types to consider:

• Portfolio banks and credit unions hold loans on their balance sheets and can be flexible on property type or documentation. Relationship banking can help.
• Correspondent and wholesale lenders sell loans to aggregators. They often price competitively but follow more standardized rules.
• Non‑prime or alternative lenders allow more flexible documentation but usually charge higher rates and fees.

To tighten pricing and reduce risk:

• Improve your credit score and reduce revolving balances before you apply.
• Increase your down payment to lower LTV.
• Shop multiple lenders, including local portfolio lenders and national channels. Pricing can vary meaningfully.
• Lock after key underwriting milestones, and ask about any float‑down options.
• Consider an adjustable‑rate jumbo if you plan to sell or refinance within a set horizon, and understand the rate reset risk.

Prepare for pre‑approval

A strong pre‑approval protects you in a competitive market like Millbrae or San Mateo. Gather these items early to reduce back‑and‑forth once you are in escrow:

• Two years of W‑2s for salaried borrowers, and two years of personal and business tax returns for self‑employed.
• The most recent 30 to 60 days of pay stubs and bank statements.
• Statements for brokerage and retirement accounts that cover required reserves.
• A simple letter explaining any large deposits, recent credit events, or the source of your down payment.
• Photo ID and any tax transcript authorizations your lender requests.
• Once in contract, the signed purchase agreement, HOA documents if applicable, and the preliminary title report.

How reserve math works

Reserves are measured in months of your full PITI payment, and they include property taxes, HOA dues if applicable, and insurance. For illustration, assume a $1,600,000 loan with an estimated PITI around $8,000 per month. Six months of reserves equals $48,000, and twelve months equals $96,000.

Lenders often want these funds seasoned and liquid or easily liquidated. If you plan to use stock or retirement accounts for reserves, expect lenders to discount values or require proof of access.

Real‑world scenarios

• Scenario A: You have a 740 FICO, 20 percent down on a $2,000,000 home, and stable W‑2 income. Many jumbo lenders offer competitive fixed options in this profile. Plan for 6 to 12 months of PITI in reserves.
• Scenario B: You are self‑employed with strong assets, seeking 80 percent LTV. A bank‑statement jumbo could be an option, though pricing is often higher and reserves may be on the upper end.

Avoid common hiccups

• Moving funds between multiple accounts right before applying. Keep transfers simple and documented.
• Accepting large gifts without a paper trail. Use a gift letter and verify the source per lender instructions.
• Opening new credit lines or financing a vehicle during underwriting. Wait until after closing.
• Underestimating total PITI and reserves. Include taxes, insurance, and HOA dues in your planning.
• Setting too tight an appraisal or loan contingency. Allow time for Peninsula appraisals and any review process.
• Assuming all condos qualify the same way. Expect project reviews and plan for extra documentation.

Your next step

Buying in Millbrae or anywhere in San Mateo County takes clear planning. With a focused strategy, organized documents, and the right loan structure, you can move confidently and make a strong offer. If you want a local, data‑informed partner to map your steps from pre‑approval through closing, connect with Next Gen Properties. Book a complimentary home strategy session and get a plan tailored to your timeline and goals.

FAQs

What is a jumbo loan in San Mateo County?

• A jumbo is any first mortgage above the FHFA’s local conforming loan limit, which many Peninsula purchases exceed due to high prices.

How much down do I need for a Millbrae jumbo?

• Many programs expect 10 to 20 percent down for primary homes, while lower LTV often earns better pricing and flexibility.

How many reserves do jumbo lenders require?

• In San Mateo County, 6 to 12 months of PITI is common, with higher amounts possible for larger loans or alternative documentation.

Are jumbo rates higher than conforming?

• Often slightly higher, but the spread changes with markets and borrower profile, and can be close in stable periods.

How long does a Peninsula jumbo purchase take?

• Plan for 30 to 45 days, since appraisals and jumbo underwriting can add time, especially for unique properties.

Are condo jumbos harder to finance?

• Yes, due to project reviews and documentation; non‑warrantable projects can limit options or increase pricing.

Can self‑employed buyers get jumbo financing?

• Yes, with full tax returns or alternative programs like bank‑statement loans, usually with higher rates and reserve needs.