Shopping for a home in San Rafael or Mill Valley and seeing prices that stretch beyond typical loan amounts? You are not alone. In Marin County, many move‑up buyers use jumbo financing to make the numbers work. In this guide, you will learn what a jumbo loan is, how it differs from a conforming loan, what lenders expect, how rates compare, and how to prepare a clean, stress‑tested application. Let’s dive in.
What is a jumbo loan?
A jumbo loan is any mortgage that exceeds the conforming loan limit for the county where the property is located. These loans are non‑conforming, which means they are not purchased by Fannie Mae or Freddie Mac. Because of that, they follow lender and investor rules that can be stricter than conforming standards.
Conforming limits change every year and vary by county. Marin often qualifies as a high‑cost area. Always verify the current limit before you shop by checking the official FHFA conforming loan limits tool.
Why jumbos are common in Marin
Marin’s home values are often above national limits, so many buyers end up just over the conforming cap. In competitive markets like San Rafael and Mill Valley, you want your financing plan set early. A solid preapproval, adequate reserves, and a clear plan for taxes and insurance help you move quickly and negotiate with confidence.
Jumbo vs. conforming: key differences
Credit, DTI, and reserves
- Credit scores: Jumbo pricing usually favors mid‑ to high‑700s. Some lenders approve lower scores with higher reserves or pricing trade‑offs.
- Debt‑to‑income (DTI): Many jumbo programs cap DTI near 43 to 45 percent. Some allow up to about 50 percent with strong compensating factors.
- Reserves: Expect 6 to 12 months of PITI left in the bank after closing. Conforming loans often ask for less.
Down payment and mortgage insurance
- Down payment: Jumbos commonly require 10 to 20 percent down for a primary home. Lower down options exist but usually require excellent credit and more reserves.
- Mortgage insurance: MI is common on conforming loans above 80 percent LTV. It is less common on jumbos, so lenders often ask for larger down payments instead.
Rates and pricing
Jumbo rates can be higher than conforming because they are not backed by Fannie or Freddie, but the spread changes with markets. At times, jumbo rates have been similar to or even lower than conforming. Your actual quote depends on credit, LTV, loan size, property type, and investor appetite. For broad trend context, review the Freddie Mac PMMS weekly rate survey, then compare live quotes from lenders.
Appraisals and collateral
In high‑price areas, appraisers may take longer to find strong comparable sales. For very large loans, some lenders require a second appraisal or enhanced review. Work with your agent to prepare a tight comp package, especially for unique properties.
Costs to budget in Marin
Plan for more than principal and interest.
- Property taxes: Marin property taxes are typically around 1 percent of assessed value plus any local assessments. Verify current rates and any parcel taxes with the Marin County Assessor-Recorder.
- Insurance: Hillside, coastal, or wildfire‑exposed areas may increase premiums. Get quotes early and include them in your monthly payment estimate.
- HOA dues: If applicable, factor dues and any upcoming assessments into your budget and reserves.
How to qualify with confidence
Documentation checklist
Jumbo underwriting leans on complete, consistent paperwork. The CFPB’s mortgage guides are a helpful baseline.
- Income: 30 days of pay stubs, 2 years of W‑2s/1099s, and often 2 years of federal returns. Self‑employed buyers should add business returns, year‑to‑date P&L, and a CPA letter if requested.
- Assets: 2 to 3 months of bank statements for all funds used to qualify. Document large deposits and gifts with letters and statements.
- Property: Purchase contract, any HOA documents, preliminary insurance quote, and details on any rental income if applicable.
- Identity and debts: Government ID, Social Security number, and statements for all monthly obligations.
Jumbo‑specific nuances
- Reserves: Lenders verify required months of PITI are still available after your down payment and closing costs.
- Gifts: Allowed by many lenders, but rules vary. Be ready with gift letters and donor documentation.
- Asset depletion: Some lenders let you qualify using liquid assets through an approved calculation.
- Rental income: If you need it to qualify, be prepared to show history and leases. For new or accessory unit income, lenders may haircut projected amounts.
Choosing a lender and rate
Lender types for jumbos
- Portfolio banks and credit unions: Often competitive for relationship clients and may be flexible on unique files.
- Mortgage banks and brokers: Can shop multiple investors and offer niche jumbo programs.
- Correspondent lenders: Originate and sell loans, sometimes with strong jumbo pricing.
Shopping and locking smart
- Get written quotes that show rate, points, APR, and lock terms. Compare the full cost, not just the rate.
- Ask about lock length, extension fees, and any float‑down options.
- In volatile markets, consider locking once your offer is accepted to avoid rate swings during appraisal and underwriting.
Fixed vs. ARM
Fixed‑rate jumbos provide payment certainty. ARMs can start lower and fit well if you plan to sell or refinance within the fixed period. Stress test your budget with the maximum possible ARM adjustments before choosing.
Example Marin scenarios (illustrative only)
These examples are for education. Always use current quotes, current taxes, and current county limits.
Scenario A: San Rafael move‑up
- Example purchase price: $1,100,000
- 20 percent down; loan ≈ $880,000 (likely jumbo depending on the year’s limit)
- Estimated P&I at a sample jumbo rate could be in the mid‑$5,000s per month
- Add estimated property tax and insurance to reach a total PITI around the upper‑$6,000s to low‑$7,000s
- Typical requirements: strong credit, 6 to 12 months of reserves, DTI within lender limits
Scenario B: Mill Valley higher‑end
- Example purchase price: $2,100,000
- 25 percent down; loan ≈ $1,575,000 (clear jumbo territory)
- P&I often well above $10,000 monthly, plus taxes and insurance
- Reserves may range from 6 to 12 months of PITI, with tighter review of income stability
Scenario C: Bridge or carry
- Example purchase price: $1,700,000
- You need proceeds from your current Marin home for down payment
- Options: bridge loan, HELOC, or a contingent offer with a longer close
- Bridge loans are short term and cost more, so engage lenders early and request conditional approvals
Smart next steps
- Check your local limit: Confirm whether your target loan amount is jumbo using the FHFA county limits tool.
- Get preapproved early: Choose a lender who regularly closes jumbos in Marin and can explain reserves, asset sources, and appraisal expectations.
- Prepare documents: Organize income, asset, and tax records before you write offers.
- Budget the full payment: Include taxes, insurance, and any HOA dues.
- Compare at least three quotes: Pricing and overlays vary widely across lenders.
- Watch local trends: Review market updates from the Marin Association of REALTORS to align your timing and strategy.
If you want a clear, step‑by‑step plan tailored to your price range and neighborhood short list, reach out. With physician‑trained rigor and calm, local guidance, Diana Sweet will help you align financing with your goals and move forward with confidence.
FAQs
What counts as a jumbo loan in Marin?
- Any mortgage above the county’s conforming loan limit is a jumbo; confirm the current figure using the FHFA limits tool.
How much down payment is typical for a jumbo?
- Many primary‑residence jumbo programs ask for 10 to 20 percent down; lower down options exist but usually require excellent credit and higher reserves.
Are jumbo rates always higher than conforming?
- Not always; the spread changes with market conditions and investor demand, so compare current quotes and review trends on the Freddie Mac PMMS.
How many months of reserves do lenders want?
- Jumbos often require 6 to 12 months of PITI left after closing; exact amounts depend on credit, LTV, and loan size.
What documents should I gather before applying?
- Pay stubs, W‑2s/1099s, tax returns, bank statements, ID, debt statements, and for self‑employed buyers, business returns and year‑to‑date financials; see the CFPB’s mortgage guides for a full overview.
