Loading
in Daly City, CA
Choosing between a conventional loan and a jumbo loan in Daly City often comes down to your purchase price. San Mateo County's housing market frequently pushes buyers beyond standard loan limits, making this comparison crucial for local homebuyers.
Both loan types offer competitive financing for qualified borrowers. Understanding which category your home purchase falls into helps you prepare the right documents and expectations before you start your search.
Conventional loans follow guidelines set by Fannie Mae and Freddie Mac. These mortgages work for homes priced within conforming loan limits, which change annually and vary by county.
In high-cost California counties, conventional loans can finance properties up to substantial amounts. They typically require credit scores of 620 or higher, though better rates go to borrowers with 740-plus scores.
Down payment requirements start at 3% for first-time buyers and 5% for repeat buyers. Putting down less than 20% triggers private mortgage insurance until you reach 20% equity in your home.
Jumbo loans exceed the maximum conforming loan limits established by federal housing authorities. These mortgages finance luxury properties and high-value homes common throughout Daly City and San Mateo County.
Lenders assume more risk with jumbo loans since they cannot sell them to Fannie Mae or Freddie Mac. This typically means stricter qualification standards, including higher credit score requirements and larger cash reserves.
Most jumbo lenders want to see credit scores of 700 or higher. You will also need significant documentation of income, assets, and employment stability to qualify for these larger loan amounts.
The primary difference is loan size. Conventional loans stay within limits set annually by federal agencies. Jumbo loans start where those limits end, allowing you to finance more expensive properties.
Credit requirements differ significantly. Conventional loans may approve borrowers with 620 scores, while jumbo loans typically require 700 or higher. Jumbo lenders also scrutinize your debt-to-income ratio more carefully.
Down payment expectations vary. Conventional loans allow as little as 3% down with mortgage insurance. Jumbo loans often require 10-20% down, though some lenders offer programs with lower down payments for exceptional borrowers.
Interest rates can surprise buyers. Rates vary by borrower profile and market conditions, but jumbo rates sometimes compete with or beat conventional rates due to the stronger borrower profiles they attract.
Your purchase price determines which loan type you need. If the Daly City home you want exceeds conforming loan limits for San Mateo County, you will need jumbo financing regardless of preference.
For homes priced near the conforming limit, consider your financial profile. Borrowers with excellent credit and substantial reserves might find jumbo loans competitive. Those with lower down payments or modest credit histories benefit from conventional loan flexibility.
Think about your long-term plans. Conventional loans with PMI let you buy sooner with less cash down. Jumbo loans reward patience and savings with no mortgage insurance requirements, though they demand more upfront capital.
Conforming loan limits change annually and vary by county. San Mateo County qualifies as a high-cost area with limits above the national baseline. Check current limits with your lender as they reset each January.
Yes, by putting down 20% or more on your purchase. You can also request PMI removal once you reach 20% equity through payments or appreciation. Some lenders offer lender-paid PMI programs with slightly higher rates.
Not always. Rates vary by borrower profile and market conditions. Jumbo loans sometimes offer competitive or even lower rates because they attract financially stronger borrowers with excellent credit and substantial assets.
Beyond your down payment, most jumbo lenders want 6-12 months of mortgage reserves. The stronger your overall financial profile, the more flexible lenders become with specific requirements.
Yes, refinancing between loan types is possible as your home value and loan balance change. Many homeowners refinance from jumbo to conventional after paying down principal or as loan limits increase.