Jumbo vs. High-Balance Conforming: A Guide for Bay Area Buyers
The Bay Area Loan Limit Reality
If you're buying a home in San Jose, San Mateo, or San Francisco, you've likely noticed that almost every property is priced over $1 million. This reality creates confusion and anxiety for buyers who hear the term "Jumbo Loan" and immediately assume they'll face higher interest rates and stricter requirements.
The good news? Most Bay Area buyers don't actually need a true Jumbo loan. Understanding the difference between High-Balance Conforming loans and true Jumbo loans can save you thousands of dollars in interest and open doors you thought were closed.
What is a High-Balance Conforming Loan?
A High-Balance Conforming Loan is a mortgage that exceeds the standard national loan limit ($766,550 in 2024) but remains within the county-specific limit set for high-cost areas. Because the Bay Area is designated as a high-cost region, Fannie Mae and Freddie Mac still back these loans—meaning you get conforming loan benefits even on a $1.3 million purchase.
2024 High-Balance Limits for Bay Area Counties:
- Santa Clara County (San Jose, Palo Alto, Sunnyvale): $1,149,825
- San Mateo County (Redwood City, San Mateo, Burlingame): $1,149,825
- Alameda County (Oakland, Fremont, Berkeley): $1,149,825
- San Francisco County: $1,149,825
- Marin County (San Rafael, Novato): $1,149,825
If your loan amount falls below these limits, you qualify for a High-Balance Conforming loan—which typically offers better interest rates than true Jumbo loans because they're still backed by government-sponsored enterprises.
What is a True Jumbo Loan?
A true Jumbo loan is any mortgage that exceeds the county-specific limit. In the Bay Area, this means loans above $1,149,825. These loans are not backed by Fannie Mae or Freddie Mac, so lenders take on more risk—which historically meant stricter requirements.
Traditional Jumbo Loan Myths vs. Reality:
❌ Myth: You need 20% down for a Jumbo loan
✅ Reality: I have access to Jumbo products with as little as 10% down for qualified buyers in the Bay Area.
❌ Myth: Jumbo loans always have higher rates
✅ Reality: In today's market, Jumbo rates are often competitive with conforming rates, especially for borrowers with strong credit and income.
❌ Myth: You'll pay PMI with less than 20% down
✅ Reality: Many of our 10% down Jumbo loan programs have no PMI, keeping your monthly payments lower.
The High-Balance Conforming Sweet Spot
For most Bay Area tech workers and families, the ideal scenario is staying within the High-Balance Conforming limit. Here's why:
- Lower interest rates compared to true Jumbo loans
- More flexible underwriting because Fannie/Freddie backing reduces lender risk
- Options for as little as 5% down with certain programs
- Easier to qualify if you're using RSU income or have a shorter employment history
This is why understanding your county-specific loan limits is critical. A $1.4 million home in San Mateo County with 20% down ($280k) results in a loan amount of $1,120,000—which falls comfortably within the High-Balance Conforming limit and qualifies for better rates.
Real-World Bay Area Scenario
Scenario: You're buying a $1.5 million home in San Jose (Santa Clara County).
Option 1: Put down 15% ($225k). Your loan amount is $1,275,000—this exceeds the High-Balance limit and requires a true Jumbo loan.
Option 2: Put down 24% ($360k). Your loan amount is $1,140,000—this stays within the High-Balance Conforming limit, qualifying you for better rates and terms.
The difference? Even a 0.25% rate difference on a $1.14M loan saves you approximately $190/month or $68,400 over 30 years.
This is why working with a local Bay Area mortgage expert who understands these nuances is essential. We can structure your down payment and loan amount to maximize your savings.
When a True Jumbo Loan Makes Sense
Sometimes, a true Jumbo loan is unavoidable—and that's okay. If you're buying a $2 million home in Palo Alto or a $3 million property in Marin, you'll need Jumbo financing regardless of your down payment.
The key is working with a broker who has access to competitive Jumbo loan products:
- 10% down Jumbo loans with no PMI for qualified buyers
- Flexible income documentation for tech professionals with RSU and bonus income
- Competitive rates that rival High-Balance Conforming loans
- Fast closings to compete in the Bay Area's competitive market
Unsure if You Need a Jumbo or Conforming Loan?
Text John Zialcita today for a free county limit check and personalized loan strategy for your Bay Area home purchase.