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in Los Angeles, CA
Los Angeles real estate splits into two financing worlds. Properties under the conforming limit use conventional loans, while anything above needs jumbo financing.
The difference isn't just loan size. Approval standards, rates, and reserve requirements change completely once you cross that threshold.
Conventional loans work for properties up to the conforming limit. You can put down as little as 3% with strong credit, though you'll pay mortgage insurance below 20%.
These loans hit the sweet spot for first-time buyers and move-up borrowers in neighborhoods like Silver Lake, Echo Park, and parts of the Valley. Approval focuses on clean credit, steady income, and typical debt ratios.
Rates stay competitive because lenders can sell these loans to Fannie Mae or Freddie Mac. That backing creates better pricing than you'll find with jumbo products.
Jumbo loans finance anything above the conforming limit. In Los Angeles, that means most of Westside, coastal areas, and anywhere the median price pushes seven figures.
These aren't government-backed, so lenders take on full risk. Expect tighter credit requirements, larger down payments, and more scrutiny on your financials. Most jumbo lenders want 680+ credit and 10-20% down minimum.
The trade-off? You can finance multi-million dollar properties that conventional loans can't touch. Rate pricing varies by borrower profile and market conditions, but strong applicants often find competitive terms.
The loan limit draws the hard line. Conventional caps at the conforming limit, while jumbo starts where conventional ends and goes as high as the property demands.
Approval standards tighten significantly with jumbo. Lenders want bigger down payments, higher credit scores, and 6-12 months of reserves sitting in your accounts. Conventional programs accept 3% down and reserves aren't always required.
Rate structures differ too. Conventional loans price off Fannie and Freddie guidelines with predictable adjustments. Jumbo rates depend on your full financial picture and each lender prices risk differently.
Your purchase price makes the first cut. If the property falls under the conforming limit, conventional almost always wins with lower rates and easier approval.
Above that threshold, jumbo becomes your only option unless you make a massive down payment. Focus on credit cleanup and building reserves before shopping in higher price ranges. Most jumbo lenders want to see financial cushion beyond just closing costs.
In borderline situations, running both scenarios makes sense. Sometimes a larger down payment keeps you conventional, saving money long-term even with the bigger upfront cost.
Conforming limits change annually and vary by property type. Single-family limits differ from multi-unit properties, so check current FHFA guidelines for your specific situation.
Yes, some jumbo programs accept 10-15% down. Pricing worsens below 20%, and you'll need exceptional credit plus significant reserves to qualify.
Not always. Strong borrowers with large down payments sometimes get jumbo rates that match or beat conventional pricing. Rates vary by borrower profile and market conditions.
Conventional loans typically close quicker due to standardized underwriting. Jumbo loans need more documentation review, adding 5-10 days to typical timelines.
Yes, but expect tougher requirements. Most lenders want 25-30% down for jumbo investment properties and higher credit scores than primary residence purchases.