Jumbo Loan Basics for Danville Homebuyers

Shopping for a home in Danville and wondering if your mortgage will be a jumbo? You are not alone. With many East Bay homes priced above standard limits, jumbo financing is common here. This guide breaks down what counts as a jumbo loan, what lenders expect, and how to navigate Danville’s local nuances so you can move forward with confidence. Let’s dive in.

Conforming vs. jumbo loans in Danville

A conforming loan follows size limits and guidelines set by Fannie Mae and Freddie Mac so lenders can sell the loans to those agencies. Because these loans fit a standardized box, pricing is often competitive and underwriting tends to be more predictable.

A jumbo loan is any mortgage that exceeds the conforming loan limit for the county where the property is located. Since jumbos are not purchased by Fannie Mae or Freddie Mac, they are typically funded by banks, portfolio lenders, or non‑agency investors. That means documentation, pricing, and reserve rules can be different.

County limits matter. The Federal Housing Finance Agency publishes county limits each year, and many Bay Area counties, including Contra Costa and Alameda, often fall under the high‑cost ceiling. As an example only, the 2024 baseline one‑unit limit was $766,550 and the high‑cost ceiling was $1,149,825. Limits change annually, so always confirm the current year’s figure before deciding whether your loan is conforming or jumbo.

How to know if your loan will be jumbo

Check county and property type

Start by confirming the taxing county for the property. A Danville home will be evaluated against Contra Costa County’s limit. If you are looking just across the line in Alameda County, the Alameda limit applies. Also confirm the number of units. FHFA publishes higher limits for 2, 3, and 4 units, which can change the conforming vs. jumbo calculation.

Verify the current limit

Ask your lender or mortgage broker to confirm the current year’s county limit for your property and loan scenario. Lenders track these figures and can tell you immediately whether your target loan amount is conforming or jumbo. If a property straddles a boundary or has a mailing address different from the taxing county, your lender will verify the correct jurisdiction.

Be mindful of appraised value

Your maximum loan amount is always tied to the lower of the purchase price or appraised value. If the appraisal comes in below contract price, your loan could flip from conforming to jumbo or require a larger down payment.

What jumbo lenders look for

Down payment and LTV

Conforming programs can allow lower down payments, sometimes as low as 3–5% with private mortgage insurance. Jumbo programs usually expect more. Many competitive jumbo options require 10–20%+ down, with best pricing often at 20% or higher. Some lenders do offer 10–15% down jumbos, but expect stronger credit, more reserves, and tighter pricing.

Cash reserves

Jumbo lenders commonly require additional cash reserves beyond your down payment and closing costs. For a primary residence, 6–12 months of total mortgage payments (principal, interest, taxes, and insurance) is typical. For second homes or investment properties, 12+ months is common. Acceptable reserves are usually liquid, documented assets, and retirement accounts may be considered if withdrawal rules are documented.

Credit score and history

Jumbo financing favors strong credit. Many lenders price their best offers for 740+ scores, and some prefer 760+. Programs can be available in the 700–740 range but may come with higher rates or extra reserves. Clean payment history and no recent major credit events are important.

Debt‑to‑income ratio

Conforming loans often allow DTIs up to about 45–50% with the right compensating factors. Jumbo lenders are usually stricter. Typical maximum DTI is 43–45%, though some portfolio lenders may stretch with strong reserves, high credit scores, or low loan‑to‑value.

Income documentation

Expect full documentation. W‑2 earners generally provide recent pay stubs and two years of W‑2s. Self‑employed buyers typically provide two years of tax returns and year‑to‑date profit and loss statements. Some lenders offer bank‑statement programs that use 12–24 months of deposits to document income, but pricing and requirements are different from standard underwriting.

Appraisals and comparables

In higher‑priced Danville neighborhoods, appraisers may have fewer truly comparable sales and may need more analysis. For unique or luxury properties, lenders sometimes order a second opinion or a specialty appraisal. Plan time for this step and be ready to provide thoughtful comparable sales data if needed.

Rates and lender types

Jumbo rates can be similar to or slightly higher than conforming rates, depending on market conditions and each lender’s appetite. Portfolio lenders that keep loans on their own books may price very competitively for the right borrowers and can offer flexible terms. It pays to compare written quotes from multiple jumbo‑capable lenders.

Consider these lender options:

• Portfolio banks that hold loans in house
• Retail or wholesale mortgage lenders with jumbo programs
• Credit unions that sometimes offer member‑friendly pricing
• Non‑QM options, including bank‑statement programs for self‑employed buyers
• VA loans for eligible veterans. With full entitlement, VA does not impose a strict dollar cap the way conforming limits do, though VA underwriting rules still apply.

Danville factors that can affect jumbo approvals

Market profile and pricing

Danville has a large share of single‑family homes with prices that often exceed conforming limits. Many buyers here use jumbo financing, or combine strategies such as piggyback loans, bridge loans, or tapping equity from another property to reach their target price.

Property taxes and assessments

In California, base property tax is roughly 1% of assessed value, and local assessments, Mello‑Roos, and voter‑approved bonds can increase the bill. Lenders include these amounts in your monthly housing cost, which influences your DTI and reserve requirements. Ask early for exact tax and assessment figures so there are no surprises during underwriting.

Condos, PUDs, and luxury estates

Condo projects must meet certain criteria, and some jumbo programs apply strict rules for owner‑occupancy ratios, HOA reserves, and litigation. Detached single‑family homes are generally simpler, but the appraisal must support the value. For estate‑level properties with few comps, expect more valuation scrutiny and possibly extra review steps.

Timing and contract strategy

Jumbo underwriting can take longer than a straightforward conforming file because of manual reviews and additional documentation. Build in time for appraisal and underwriting when you set your close date. In competitive situations, a strong preapproval from a jumbo‑capable lender that documents your reserves can make your offer more compelling.

Your pre‑purchase jumbo checklist

• Confirm the taxing county for the property and look up the current FHFA conforming loan limit for that county and the unit count.
• Gather documentation: recent pay stubs, two years of W‑2s or tax returns, bank and investment statements, and evidence of large asset sources or gifts.
• Get written preapproval and pricing from multiple jumbo‑capable lenders, including a portfolio bank and a mortgage broker.
• Request exact property tax figures, including Mello‑Roos or special assessments, and share them with your lender.
• Plan reserves: budget for 6–12 months of PITI in liquid assets for a primary residence.
• Ask about appraisal expectations, potential for a second valuation, and local appraiser availability.

Smart ways to stay flexible

• Explore piggyback structures that combine a first mortgage with a smaller second to keep the first loan at or below the conforming limit. Ask lenders about current pricing and guidelines.
• Consider a bridge loan or equity line on your current home if you are buying before selling. This can help you present a stronger offer and manage timelines.
• Discuss low‑down jumbo options if you have strong compensating factors, such as high credit scores and large reserves.

Work with a local guide

Jumbo financing is about details. Getting the county limit right, confirming assessments, coordinating a realistic appraisal, and timing your contract all matter in Danville. You deserve a partner who understands the East Bay market and can help you assemble the right lender team.

If you are weighing jumbo options for a Danville purchase, reach out to Nancy Renton for a warm, data‑driven consultation. With local Tri‑Valley expertise and a client‑first approach, Nancy will help you compare loan paths, align your financing with your goals, and move forward with clarity.

FAQs

What is a jumbo loan for a Danville home purchase?

• A jumbo loan is a mortgage that exceeds the current conforming loan limit for Contra Costa County, which makes it ineligible for purchase by Fannie Mae or Freddie Mac.

How do I check if my Danville loan amount is jumbo?

• Confirm the taxing county and unit count, then ask your lender to verify the latest FHFA county limit and whether your target loan amount exceeds it.

How much down payment do jumbo lenders usually require in Danville?

• Many competitive jumbo programs expect 10–20% down, with best pricing often at 20%+. Exact requirements vary by lender, credit, and property type.

How many months of reserves do jumbo loans require?

• For a primary residence, plan on 6–12 months of PITI in documented, liquid assets. Second homes and investment properties often need 12+ months.

Are jumbo rates much higher than conforming rates?

• Not always. Rate differences change with market conditions and lender appetite. Portfolio lenders can sometimes offer very competitive jumbo pricing.

What if my appraisal comes in lower than the purchase price?

• The lender bases your maximum loan on the lower of appraised value or purchase price. If value is short, you may need a larger down payment, an appraisal review, or to renegotiate or cancel within your contingencies.