California’s high home prices often exceed federal conforming loan limits, making jumbo loans essential for many buyers. As of 2025 the state’s median home price was roughly $884,000 – well above the national conforming loan cap of $806,500. In expensive markets like San Francisco (median about $1.64M) and Orange County (about $1.4M), even 20% down payments can still leave balances over the limit, requiring jumbo financing.

Jumbo mortgages are simply non-conforming loans that exceed FHFA limits. They are not government-backed, so lenders impose stricter rules. For example, most jumbo buyers need at least 20% down (often more) and a higher credit score (around 720+). 

Lenders also expect a low debt-to-income ratio (typically 43% or less) and substantial cash reserves (often 12 months of payments). Although jumbo rates are comparable to conforming mortgages today, borrowers should budget for larger monthly payments and closing costs due to the loan size.

Why Jumbo Loans Are Common in California

California’s housing market is one of the most expensive in the country. Home prices are far above national norms. Because these prices surpass the 2025 conforming loan limit, many Californians must turn to jumbo loans. High-cost regions like the Bay Area, Los Angeles, and coastal counties have especially steep prices, so jumbo mortgages are often the only way to finance properties there.

The FHFA designates certain high-cost areas (many in California) where the conforming limit is higher. But even in those areas, home prices can exceed the high limit. For example, California’s median single-family price is just shy of $900,000 – above the standard $806,500 limit and even above the high-cost ceiling of $1,209,750 in many counties.

In short, California’s high home values make jumbo financing common, especially for luxury homes, coastal properties, and multi-unit residences that often exceed the conforming loan caps.

2025 Conforming Loan Limits (California)

Each year FHFA sets conforming loan limits. For 2025, the baseline limit for one-unit homes is $806,500 nationwide. In designated high-cost counties, the limit can be up to $1,209,750 (150% of baseline) for a single-family home. California has many high-cost counties where the higher limit applies. The table below lists the 2025 one-unit conforming loan limit for several expensive California counties:

As the table shows, many populous Bay Area and Southern California counties have the $1,209,750 ceiling for one-unit loans. By contrast, most other California counties retain the $806,500 baseline limit. Even within a county, two-unit and larger properties have higher limits, but this table focuses on single-family homes. In any high-cost California county, a home priced above the listed limit will require a jumbo loan.

Borrower Requirements: Down Payment, Credit and Income Verification

Jumbo loans generally require stronger borrower qualifications than conforming loans.

• Down payment: Most jumbo lenders expect a substantial down payment, typically 20% or more of purchase price. Some specialized programs may allow as little as 10% down, but this is rare and usually requires excellent credit and reserves.
• Credit score: Borrowers usually need a high credit score – often 700–740+ – to qualify for the best jumbo rates. Many lenders want FICO 720 or higher.
• Debt-to-Income (DTI): Lenders typically cap total DTI at about 43% for jumbo applicants.
• Cash reserves: Because jumbo loans are larger, lenders often require ample reserves, commonly 6–12 months of mortgage payments – in addition to down payment and closing costs.
• Income documentation: Requirements depend on borrower type. W-2 employees typically qualify with standard documents: two years of tax returns, W-2 forms, recent pay stubs, and proof of employment. Self-employed borrowers face more scrutiny. They normally supply two years of personal and business tax returns (with all schedules) and possibly profit-and-loss statements. 

However, many lenders offer alternative programs to help self-employed buyers, such as bank-statement loans using 12–24 months of deposits to verify income.

Eligible Properties for Jumbo Financing

Jumbo loans are available for most types of residential properties. Most lenders allow jumbo financing for primary residences, second or vacation homes, and investment properties. Eligible property types commonly include single-family houses, 2–4 unit multifamily homes, condominiums, and planned-unit developments, subject to lender approval. Some stricter jumbo programs may have additional condo or co-op requirements.

Risks and Benefits of Jumbo Loans

Jumbo loans make it possible to buy expensive homes that are otherwise unaffordable under conforming limits. Benefits include being able to secure financing for luxury or high-cost homes in California, avoiding the complexity of piggyback loans, and often avoiding private mortgage insurance because large down payments are required.

However, jumbo loans carry greater risk and cost. Lenders impose tighter underwriting to mitigate risk: higher credit standards, larger minimum down payments, and stricter income and reserve requirements. Interest rates on jumbo loans are often slightly higher than conforming rates to reflect this risk, though many banks keep jumbo rates competitive. 

Borrowers should expect higher closing costs and more documentation. Because of the large loan size, monthly mortgage payments are bigger, increasing financial strain.

Real-World Jumbo Loan Example

To illustrate, consider a home priced at $1,500,000 in Orange County (where the median price is about $1.4M). With a 20% down payment ($300,000), the borrower finances $1,200,000. 

At roughly a 6.5% interest rate on a 30-year fixed mortgage (a typical jumbo rate today), the principal-and-interest payment would be on the order of $7,600 per month. This estimate excludes property taxes and insurance. 

In this scenario, the jumbo loan’s size and rate push the payment well above what a conforming loan at the $806,500 limit would cost.

Jumbo Loan Refinancing

Refinancing a jumbo loan works much like refinancing any mortgage but comes with stricter rules. In a rate-and-term refinance, you replace your existing jumbo loan with a new one to secure a lower interest rate or a different term. Because jumbo balances are large, rate-and-term refinancing can yield big savings. 

Reducing the rate by just 0.50% on a $1.4 million loan would cut monthly payments by about $465 and save roughly $167,000 in interest over the loan life. Jumbo refinancers must still meet lender criteria: expect strong credit, a DTI below about 45%, and plenty of documentation. Jumbo refinancing applications are underwritten very carefully, often requiring proof of assets and 6–12 months of payment reserves.

Another common refinance option is a cash-out refinance, which is useful if you have built equity. In a jumbo cash-out refinance, you take out a new loan larger than your current balance and keep the extra cash (subject to lender maximums). 

Homeowners often do this to fund home improvements, pay off high-interest debt, or cover large expenses. The new jumbo loan would have a larger balance, so payments increase, but you receive the cash upfront.

Whether rate/term or cash-out, refinancing a jumbo loan may involve trade-offs. You should compare the costs (new closing fees, appraisal, etc.) against potential savings. Also, watch the property’s conforming limit: if your loan balance has dropped below the local limit, you might qualify to refinance into a conforming loan with easier terms.

Frequently Asked Questions

Can I get a jumbo loan with only 10% down?

Possibly. Traditional guidance is 20% down, but many lenders now offer jumbo loans with lower down payments. Some programs allow as little as 10% (or even 5%) down without any PMI. These loans typically require excellent credit and more reserves.

Do jumbo loans have mortgage insurance (PMI)?

No. Jumbo loans generally do not require PMI, even if you put down less than 20%. Instead, jumbo lenders require larger down payments or price the loan to account for risk.

Are jumbo loans available for second homes or vacation properties?

Yes. Jumbo mortgages can finance primary residences, second homes, and investment properties. The rates and rules may be stricter for non-owner-occupied properties, but fundamentally the jumbo loan is not limited to a primary home.

Can self-employed borrowers get a jumbo loan?

Yes, but expect extra paperwork. Self-employed applicants must prove income with tax returns, profit-and-loss statements, and bank statements. If you can document your earnings and meet the usual credit and down payment requirements, being self-employed does not disqualify you.

Is it harder to refinance a jumbo loan later?

Generally yes. Refinancing a jumbo loan involves similarly strict standards as the original loan. Lenders will look for high credit scores, strong cash reserves, and lower DTI ratios when refinancing a large balance.