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in Avalon, CA
Avalon's unique island real estate market creates an interesting financing challenge. Most properties here push above standard loan limits, making the conventional vs jumbo decision critical for buyers.
The choice hinges on property value and your financial profile. Conventional loans cap at $806,500 for Los Angeles County in 2024, while jumbo loans handle everything above that threshold.
Conventional loans offer the most competitive rates and flexible terms for properties under $806,500. You'll need 620 minimum credit score, though 740+ gets you the best pricing.
These loans allow as little as 3% down for first-time buyers, 5% for everyone else. Expect to pay PMI if you put down less than 20%, typically 0.3% to 1.5% of the loan amount annually.
Avalon's limited inventory under the conforming limit makes conventional loans less common here. But if you find a smaller condo or cottage, this is your best financing option.
Jumbo loans handle Avalon's typical property values, which frequently exceed $1 million. These loans have no upper limit, financing multi-million dollar waterfront estates without issue.
Expect stricter requirements: 700+ credit score minimum, often 720+ for best rates. Most lenders want 10-20% down, and you'll need 6-12 months of reserves in the bank.
Rates run 0.25% to 0.75% higher than conventional, though competitive shopping narrows that gap. The trade-off is access to financing that conventional loans simply can't provide.
The $806,500 conforming limit is the bright line between these products. Below that number, conventional wins on rate and flexibility. Above it, jumbo is your only option outside government programs.
Credit requirements jump significantly. A 620 borrower qualifies for conventional but won't touch jumbo financing. The reserve requirement is another major split—conventional needs minimal reserves while jumbo demands substantial liquid assets.
Income documentation is similar for both, but jumbo underwriters scrutinize everything more carefully. They'll verify your reserves, question large deposits, and demand explanation for any credit anomalies.
For Avalon buyers, this decision usually makes itself. The island's property values push most buyers into jumbo territory whether they planned for it or not.
If you're considering a smaller property under $800,000, conventional financing saves you money and hassle. You'll get better rates, easier approval, and more flexible down payment options.
For typical Avalon real estate, prepare for jumbo requirements before you start shopping. Build your reserves, clean up your credit to 720+, and have 15-20% down ready. Most of my island buyers end up here.
$806,500 for single-family homes. Anything above requires jumbo financing, which covers most Avalon properties.
Yes, though 15-20% down gets better rates. Expect stricter credit and reserve requirements with lower down payments.
Typically 0.25-0.75% higher than conventional. Rates vary by borrower profile and market conditions based on credit strength and reserves.
Minimum 700, but 720+ qualifies for best pricing. Conventional loans accept 620 for properties under the limit.
Six to twelve months of mortgage payments in liquid assets. Conventional loans need minimal reserves by comparison.
Yes, jumbo loans don't require PMI at any down payment level. That's one advantage over low-down conventional financing.