The California Bank Statement Jumbo Loan: Product in the Spotlight

In this article: An explanation of bank statement jumbo loans, and how certain California home buyers can benefit from using them.

We’ve written about bank statement loans in the past, and how they can benefit self-employed borrowers or those with non-traditional income sources. Today, we will approach this topic from a different angle by focusing on jumbo mortgages for high-end properties.

By combining bank statement loans with jumbo mortgage financing, self-employed home buyers in California can get the funding they need with minimal documentation.

These products are actually a combination of two different types of specialty loans. So let’s take them one at a time.

Bank Statement Loans

In California, a bank statement home loan is a type of mortgage that allows certain types of borrowers to qualify for a loan by using bank statements as proof of income, instead of tax returns or pay stubs.

The borrower will have to provide anywhere from 3 to 24 months of bank statements, when applying for this type of mortgage loan. (The exact number can vary due to a number of factors.) The lender will use those bank statements to calculate an average monthly income, to determine how much the person is able to borrow.

California bank statement loans are often used by self-employed individuals or those with non-traditional income sources. These types of borrowers typically have a harder time qualifying for a regular or conventional mortgage loan, due to their income and employment situation.

As you might have guessed, bank statement loans typically have higher interest rates than regular mortgage products. That’s because they rely almost exclusively on bank statements for income verification, which increases the level of risk for the lender. Anything that increases risk typically comes with a higher interest rate.

But it’s possible to refinance the loan later on, to secure a better rate. In fact, this is a common strategy among borrowers who use this type of financing.

So that covers the bank statement side of things. Now, let’s shift gears and talk about the so-called “jumbo” mortgage product.

The Jumbo Mortgage Loan

As the name implies, a jumbo mortgage loan is a bigger-than-average home loan that’s used to purchase expensive properties.

More specifically, a jumbo mortgage is any loan that exceeds the size limits set by the Federal Housing Finance Agency (FHFA). These “conforming loan limits” can vary from one county to the next, because they are based on median home values.

For example, the 2023 conforming loan limit for San Francisco is $1,089,300 for a single-family property. So anything above that threshold would be considered a jumbo mortgage loan, based on the 2023 limits set by the FHFA.

These “oversized” mortgage products typically require a larger down payment and better credit scores, when compared to smaller conforming loans. Once again, this has to do with risk. A larger loan that cannot be sold to Freddie Mac or Fannie Mae represents a bigger risk to the lender or servicer. So they often come with higher interest rates and stricter qualification criteria.

Jumbo loans tend to be more common in expensive real estate markets, where the typical home is priced above the conforming loan limits mentioned earlier. Because of this, they are widely used in California’s coastal real estate markets, and also across the San Francisco Bay Area. Higher home prices require a higher level of financing.

Putting the Two Products Together

Put these two concepts together and you have the jumbo bank statement loan, a specialty mortgage product for a specific type of borrower in California.

The jumbo bank statement loan allows borrowers to qualify for financing on more expensive properties and with less documentation, compared to a traditional mortgage.

They do come with higher interest rates, as mentioned above. But in many cases the loan can be refinanced later on down the road, to secure a lower rate. This makes it a great way for borrowers to get their “foot in the door” in terms of buying a property, even if they are self-employed or have non-traditional income sources.

We are able to offer jumbo bank statement loans to California home buyers with as little as 10% down — and no mortgage insurance. This is a specialty loan product that a lot of lenders don’t even offer.

As a mortgage broker, we work with multiple lenders who offer a broad range of products. So we have access to jumbo bank statement loans and other “non-conforming” mortgage products that traditional lenders might not offer.

These unique loans are often well suited for self-employed home buyers seeking alternative financing for high-priced homes that exceed $1 million. They allow borrowers to qualify using the average monthly bank deposits, instead of providing tax returns.

The bottom line: a California jumbo bank statement loan can be a good option for high-net-worth individuals who have complex financial situations and need a loan that exceeds the conforming limits for their county.

Ready to Explore Your Financing Options?

Bridgepoint Funding is located in the Bay Area but serves borrowers all across the state of California. Because of our location and client base, we specialize in specialty products such as the jumbo bank statement loan.

We also know how to structure these loans properly, to increase the chance that they clear underwriting and close successfully.

If you have questions about California jumbo loans, bank statement financing, or any other topic covered in this article, please contact our knowledgeable staff. We can review your current financial situation – including income and employment – to determine the best option for you.