Jumbo Loan Threshold Increased for Bay Area Counties in 2021

The threshold that separates conforming and jumbo mortgage loans has gone up for 2021, in all nine counties that make up the San Francisco Bay Area. Federal housing officials made this change in response to rising home values nationwide.

In six of the nine Bay Area counties, a 2021 jumbo loan is anything above $822,375. Napa, Solano and Sonoma counties have their own limits this year, based on their median home values.

The table below shows the 2021 jumbo mortgage loan range for all counties that make up the San Francisco Bay Area. You’ll also find some other helpful information relating to these “oversized” mortgage products.

Bay Area Jumbo Loans in 2021: All Counties

At the end of 2020, the Federal Housing Finance Agency (FHFA) announced that it would be raising the conforming loan limits for most counties across the country. This means the jumbo loan threshold has gone up as well.

Here’s a quick lesson in mortgage jargon:

• A conforming home loan is one that falls within the size limits set by the FHFA. These loans can be sold to Fannie Mae and Freddie Mac, via the secondary mortgage market.
• A jumbo loan, on the other hand, is one that exceeds the county-specific size restrictions mentioned above. These loans cannot be sold into the secondary market, because they do not “conform” to those guidelines.

The table below shows the conforming and jumbo loan limits for all Bay Area counties in 2021. We created this table to help you visualize what can be a confusing topic.

Basically, if you borrow more than the conforming limit for your Bay Area county, you’ve entered jumbo loan territory. Borrowers in this financing range tend to receive extra scrutiny, due to the higher risk level (and larger size) of the mortgage loan.

The Three Outliers: Napa, Solano and Sonoma

Conforming loan limits are usually the same across an entire metro area. But in 2021, that’s not the case within the San Francisco Bay Area. Due to significant differences in home prices, some counties in our region have the maximum conforming limit for 2021, while others fall below that level.

Alameda, Contra Costa, Marin, San Francisco, San Mateo and Santa Clara counties have the highest jumbo loan thresholds in the Bay Area. The 2021 conforming loan limit for those six counties is currently set at $822,375, for a single-family property.

Napa, Solano and Sonoma counties have lower thresholds:

• In Napa County, a jumbo loan in 2021 is anything above $816,500.
• In Solano County, a jumbo loan in 2021 is any amount over $550,850.
• In Sonoma County, the jumbo loan threshold starts above $707,250.

Frequently Asked Questions, Answered

Conforming and jumbo loan limits in the Bay Area can be confusing, especially when you consider that they can change from one year to the next. As a result, home buyers and mortgage shoppers tend to have a lot of questions about this subject.

Here are some frequently asked questions (and answers) about jumbo loans in the San Francisco Bay Area.

Are jumbo loans harder to qualify for?

Banks and lenders bear some degree of risk when offering loans to borrowers. So they want to ensure the borrower is well qualified and capable of taking on additional debt. That’s in everyone’s best interest.

Jumbo loans tend to have stricter qualification requirements, due to the larger amount of money being borrowed. A bigger loan represents a higher level of risk, so a little extra scrutiny is warranted in such cases.

Home buyers seeking a jumbo loan in the Bay Area need to have good credit, a manageable level of debt, and enough income to cover their monthly payments and other recurring debts. Those are the basic requirements for a jumbo mortgage loan. Beyond that, the review process is conducted on a case-by-case basis.

Do I need a larger down payment?

Down payments are required for most types of mortgage loans, and the minimum amount can vary. For conventional conforming loans, eligible borrowers can usually put down as little as 3%. Jumbo mortgage products, on the other hand, tend to require more money down due to the larger loan size.

There is no hard-and-fast rule for the minimum down payment on a Bay Area jumbo loan. The upfront investment made by the borrower is part of a broader qualification process that includes other factors — credit score, assets, debt level, etc.

But in general, jumbo loans do require a larger upfront investment, when compared to smaller “conforming” mortgage amounts.

What kind of borrowers use jumbo loans?

These mortgage products tend to be more common in pricier real estate markets, where homes are priced well above the statewide or national average. Much of the Bay Area falls into that category. As a result, a significant percentage of borrowers in our region use jumbo loans when buying a house.

The bottom line: If you need to borrow more than the conforming loan limits for your county, you might end up using a jumbo loan to finance your purchase. Just know there are other options available in these high-cost scenarios. (See the next FAQ for more.)

Are there any alternatives to this approach?

In addition to jumbo loans, Bay Area home buyers have other financing options for high-cost properties. For instance, some borrowers choose to combine a first and second mortgage, while paying the remaining amount in the form of a down payment. This is often referred to as a “piggyback” mortgage. Learn more about this strategy.

Learn more: Do you need a jumbo loan in the Bay Area, to purchase your next home? Do you have questions that were not covered above? We’re here for you! Please contact our knowledgeable staff to get started.