Jumbo vs. Conforming Loans in Los Gatos

Are you shopping for a home in Los Gatos and wondering if your mortgage will be jumbo or conforming? You’re not alone. With Silicon Valley prices, it’s common to bump up against lending limits and tighter guidelines. In this guide, you’ll learn how to tell where the line falls, what jumbo lenders expect, and how to plan your offer and timeline in Los Gatos. Let’s dive in.

Loan types explained

Conforming loans

A conforming loan is a mortgage that meets size and eligibility rules set so it can be purchased by Fannie Mae or Freddie Mac. The key piece is the loan amount. If your loan is at or below the Federal Housing Finance Agency (FHFA) conforming loan limit for Santa Clara County for the current year, and you meet program criteria, it’s conforming.

Jumbo loans

A jumbo loan is any mortgage that exceeds the county’s conforming loan limit or does not meet agency eligibility rules. Jumbos are funded by lenders or private investors. They often carry stricter credit, cash reserve, and documentation standards than conforming loans.

How to know your loan type in Los Gatos

Use a simple check:

• Estimate your loan amount: purchase price minus your down payment.
• Look up the current FHFA conforming loan limit for a 1‑unit home in Santa Clara County.
• If your required loan amount is higher than that limit, your loan is jumbo. If it is at or below the limit and you meet program guidelines, it’s conforming.

Where jumbo starts in Los Gatos

Los Gatos sits in a high‑value part of Santa Clara County, so jumbo financing is more common here than in many markets. The exact dollar point where “jumbo” starts changes when the FHFA updates county limits. Treat that FHFA limit as the official trigger.

To visualize it, let L = the current FHFA conforming loan limit for Santa Clara County (1‑unit home). Then compare your scenarios to L:

• Scenario 1: $1,500,000 purchase with 10% down. Loan amount ≈ $1,350,000. If $1,350,000 > L, it’s jumbo. If ≤ L, it’s conforming.
• Scenario 2: $1,500,000 purchase with 25% down. Loan amount ≈ $1,125,000. Compare $1,125,000 to L to see where it lands.
• Scenario 3: $3,000,000 purchase with 30% down. Loan amount ≈ $2,100,000. This will almost always exceed L, so expect jumbo financing unless you increase cash.

Move‑up buyers in the $1–$3 million range may be conforming or jumbo depending on L and down payment. Luxury purchases above several million dollars typically require jumbo financing unless you bring substantial cash.

Underwriting differences you will feel

Rates and pricing

Jumbo rates are often modestly higher than conforming rates. The spread can be a few hundredths to a few tenths of a percentage point and varies by lender, market conditions, and your profile. Strong borrowers sometimes see jumbo rates that are close to conforming.

Down payment and LTV

• Conforming: Some programs allow as little as 3%–5% down. You usually need 20% down to avoid mortgage insurance.
• Jumbo: Many lenders expect 10%–20% down for primary homes. Putting 20% or more down often brings better pricing.

PMI and alternatives

• Conforming: If you put less than 20% down, private mortgage insurance (PMI) usually applies until you reach 20% equity.
• Jumbo: Lenders typically avoid PMI by requiring larger down payments or using structures that limit their risk.

Credit score and DTI

• Conforming: Many programs accept FICO scores in the mid‑600s, with debt‑to‑income (DTI) caps around 43%–50%, depending on the product.
• Jumbo: Lenders generally prefer FICO scores of 700+ for best pricing. DTI caps are often tighter, commonly 43%–45%.

Cash reserves

Jumbo lenders often require more reserves, measured in months of mortgage payments (PITI). Expect 6–12 months of reserves for higher‑priced homes, and more for second homes or investment properties. Conforming loans usually require fewer months of reserves.

Documentation and income

Both loan types typically use full documentation. For jumbo and certain non‑QM portfolio products, self‑employed or high‑asset buyers may use specialized programs that rely on bank statements or asset‑based income. These options require more paperwork and lender review.

Appraisals and valuations

High‑value Los Gatos homes can require complex appraisals. Lenders may order a full interior/exterior appraisal, request more comparable sales, use a second review, or even require two appraisals on larger loans. Fees are often higher and timelines longer for jumbo valuations.

Property types and occupancy

Lender rules vary for unique properties, large lots, or homes with ADUs. Jumbo lenders may be more cautious and expect stronger borrower qualifications. Second homes and investment properties carry stricter requirements for both conforming and jumbo loans.

Costs and payment expectations

Rate premiums

Jumbo borrowers typically pay a modest premium over conforming rates. The exact difference changes with the market and your credit, loan‑to‑value, and asset profile. Strong borrowers sometimes see competitive jumbo pricing similar to conforming.

Fees and closing costs

Expect higher appraisal fees for high‑value Silicon Valley properties. Jumbo loans can also include higher lender and underwriting fees. Both conforming and jumbo borrowers can use discount points to lower the interest rate. Ask lenders to show you with‑ and without‑points options so you can compare break‑even timelines.

Mortgage insurance vs. cash

• Conforming: PMI applies when you put less than 20% down, which increases the monthly payment but lowers your cash outlay.
• Jumbo: Since PMI is uncommon in jumbo programs, you usually need more cash up front to reach the lender’s target loan‑to‑value.

Los Gatos factors that matter

• Micro‑markets and valuations: Neighborhood, lot size, and views can create appraisal challenges. Your lender may need extra time or a second review on high‑end homes.
• Competition and contingencies: In multiple‑offer settings, buyers with clear financing or all‑cash may be viewed as lower‑risk. A strong preapproval tailored to jumbo can help your offer.
• Property taxes and assessments: Santa Clara County property taxes and any parcel or district assessments affect your monthly payment and DTI. Lenders consider HOA dues as well.
• Appraisal capacity: Qualified appraisers for luxury properties can be limited. Build extra time into your escrow if you expect a jumbo appraisal.
• Local lender options: Many California lenders and credit unions offer jumbo products. Shopping both local and national lenders can uncover better terms.

Your decision playbook

• Confirm the FHFA county limit: Check the current conforming loan limit for Santa Clara County. Use it as your jumbo threshold.
• Map your numbers: Purchase price minus down payment equals loan amount. Compare that loan amount to the county limit.
• Get dual preapprovals: Ask a lender that offers both conforming and jumbo to preapprove you for each path so you can pivot quickly.
• Plan your reserves: For jumbo targets, set aside 6–12 months of PITI in liquid assets if possible.
• Prepare for the appraisal: Expect higher fees and longer timelines on luxury homes. Ask your lender about appraisal turn times.
• Compare rate lock scenarios: Request side‑by‑side quotes for conforming versus jumbo, with and without points.

Buyer checklist for Los Gatos

Have these ready before you tour homes:

• Two years of W‑2s and federal tax returns
• Recent pay stubs and year‑to‑date income
• Two months of bank and asset statements
• Retirement and brokerage statements
• Documentation for large deposits or gifts
• Photo ID and employment verification contacts
• Explanations for non‑salary income or K‑1s if applicable

Make your move with a local guide

Choosing between jumbo and conforming is about more than the rate. It affects your cash strategy, your offer strength, and your escrow timeline in a competitive Los Gatos market. You do not need to figure it out alone. Our team helps you build a clear plan, coordinate with experienced lenders, and position your offer to win.

If you’re considering a home in Los Gatos or nearby West Valley communities, connect with 360 Real Estate Professionals for a friendly, no‑pressure consultation. We’ll walk you through your options and help you move forward with confidence.

FAQs

Where does the jumbo threshold fall in Los Gatos?

• The jumbo line is the current FHFA conforming loan limit for Santa Clara County. Compare your required loan amount to that limit to see if you’re jumbo.

Will I always pay more interest on a jumbo loan?

• Not always. Jumbos often cost a bit more, but strong borrowers sometimes secure rates close to conforming. Shop multiple lenders.

Do jumbo loans require a bigger down payment?

• Generally yes. Many lenders look for 10%–20% down on primary homes, with better pricing at 20% or more.

Can I get jumbo financing if I’m self‑employed?

• Yes. Expect more documentation. Some portfolio or non‑QM programs use bank statements or asset‑based income.

How will a jumbo loan affect my offer timeline?

• Jumbo appraisals and underwriting can take longer. Get a strong preapproval, plan extra time for the appraisal, and communicate clearly with escrow.