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in Merced, CA
Most Merced buyers use conventional loans because they stay under the $806,500 conforming limit. Jumbo loans kick in when you're buying above that threshold.
The loan you need depends on your purchase price, not the property type. Understanding where that line falls determines your rate, down payment, and approval odds.
Conventional loans work for most Merced purchases under $806,500. You can put down as little as 3% with strong credit, though you'll pay PMI until you hit 20% equity.
Rates on conventional loans are typically lower because Fannie Mae and Freddie Mac back them. Credit requirements start at 620, but expect better terms with 740+.
These loans offer flexibility on property type and occupancy. You can use them for primary homes, second homes, or investment properties with adjusted requirements.
Jumbo loans finance Merced properties over $806,500 without conforming loan backing. Lenders take on more risk, so they scrutinize income, assets, and credit harder.
Expect to put down 10-20% minimum on a jumbo loan. Many lenders want to see 12+ months of reserves and a debt-to-income ratio under 43%.
Credit standards are strict—most lenders require 700+ for approval. Interest rates run higher than conventional because there's no government backing to reduce lender risk.
The biggest split is loan limit: conventional stops at $806,500, jumbo starts there. That difference drives everything else—rates, reserves, and underwriting standards all get stricter on jumbo.
Down payment flexibility favors conventional loans. You can go as low as 3% with conventional, while jumbo lenders typically want 15-20% to offset their risk.
Rates vary by borrower profile and market conditions, but jumbos usually price 0.25-0.75% higher than conventional. That gap narrows for borrowers with excellent credit and large down payments.
If you're buying under $806,500 in Merced, conventional is almost always the better deal. Lower rates, smaller down payments, and easier approval make it the default choice.
Jumbo makes sense only when you need it—when your purchase price crosses that conforming limit. Come prepared with strong credit, solid income docs, and healthy reserves.
The conforming loan limit is $806,500 for single-family homes in Merced County. Above that amount, you need a jumbo loan.
Yes, by putting down at least 20% at purchase or refinancing once you reach 20% equity. PMI is required below that threshold.
Usually, yes—jumbo rates typically run 0.25-0.75% higher than conventional. Strong credit and larger down payments can narrow that gap.
Most lenders require 700+ for jumbo loans. Conventional loans start at 620, though better scores get better rates.
Expect lenders to require 12+ months of mortgage payments in reserves. Requirements increase for investment properties or multiple mortgages.