Buying in San Francisco often means dealing with bigger numbers, and your mortgage is no exception. If your target home price pushes past standard limits, you may need a jumbo loan. It can feel complex, especially if you have stock-based income or you are relocating. In this guide, you will learn what makes a loan “jumbo,” how underwriting works, how rates are priced, and how to prepare a strong file so you can move quickly on the right home. Let’s dive in.
Jumbo vs. conforming: what to know
What defines a jumbo loan
A jumbo loan exceeds the conforming loan limits set by the Federal Housing Finance Agency. Conforming loans can be sold to Fannie Mae or Freddie Mac. Loans above the limit are not eligible and are considered jumbo or non-agency. This affects pricing, documentation, and how lenders underwrite risk.
Why it matters in San Francisco
San Francisco is a high-cost market, so many purchases naturally land in jumbo territory. You will also see higher closing costs at higher price points. The city assesses tiered transfer taxes that rise with price, so budgeting for closing costs is important. Condo and multi-unit purchases often require added scrutiny of HOA reserves, budgets, and insurance, which can influence eligibility.
How lenders underwrite jumbo loans
Income and employment
For W-2 income, most lenders want two years of documentation, recent pay stubs, and employer verification. If you are self-employed or receive 1099 or K-1 income, expect to provide two years of personal and business tax returns and possibly a current profit and loss statement. If you receive stock compensation, policies vary. Vested RSUs with a clear history of vesting and liquidation may count, while unvested equity usually does not.
Assets, reserves, and sourcing
You will document all assets across bank, brokerage, and retirement accounts. Jumbo loans often require more reserves, measured in months of total payments. Six to twelve months of reserves is common, and larger loans may require more. Any large deposits will need a clear paper trail, such as a sale of securities or a documented gift.
Credit score and debt-to-income
Jumbo programs favor strong credit. Many lenders look for scores in the 700s for their best pricing, with some programs allowing lower scores at a cost. Debt-to-income ratios are often capped around the low to mid 40 percent range, unless you have strong compensating factors.
Property, appraisal, and condo reviews
Expect a full interior and exterior appraisal, and sometimes a second appraisal or desk review for higher-priced properties. Condo projects face an extra layer of review. Lenders look at the HOA’s budget, reserves, any special assessments, and owner-occupancy ratios before approving the loan.
Rates and pricing dynamics
How jumbo rates are set
Because jumbo loans are not backed by Fannie Mae or Freddie Mac, lenders price them based on their funding costs, investor demand, perceived credit risk, and overall market conditions. That means jumbo rates can sometimes be higher than conforming rates, and at other times they can be very competitive.
What affects your rate
- Loan size tiers and whether your loan is a super-jumbo
- Loan-to-value ratio, with lower LTV often receiving better pricing
- Credit score and any recent credit events
- Property type and occupancy, with investment properties priced higher
- Loan features, such as ARMs, interest-only options, or cash-out
- Market volatility and the timing of your rate lock
Lock strategy in a volatile market
Small rate changes can have a big dollar impact on large loan amounts. If you are close to closing, consider a lock that carries you through the appraisal and final underwriting. If your timeline is longer, discuss float and lock options with your lender to manage risk.
Down payment and reserves
Typical down payment bands
Many jumbo programs expect at least 20 percent down. Stronger pricing often appears at 25 to 30 percent down, especially for complex files or larger loan sizes. Second homes and investment properties commonly require larger down payments.
Using stock and RSUs
Vested stock that you have liquidated is typically acceptable for down payment and reserves, as long as you can document the sale and transfer. Unvested equity awards are not usually counted unless you can show a clear vesting schedule and convert them to cash. Plan liquidation timing early so funds season in your accounts.
Gifts and borrowed funds
Gift funds are often allowed with a proper gift letter and proof of transfer. Borrowed down payment is usually restricted and can add scrutiny, since it raises your leverage. Aim to minimize new debt before underwriting.
Quick prep checklist
- Target a down payment that places your LTV in a favorable pricing tier.
- Document reserves for at least 6 to 12 months of total payments.
- Plan and document any stock liquidations early and keep a paper trail.
- Gather gift letters and donor statements if using gift funds.
Pre-approval and timeline for SF buyers
What to prepare before you shop
Gather two years of tax returns and W-2s, your last two to three pay stubs, and recent bank and brokerage statements. Prepare explanations for any large deposits. If you receive stock compensation, organize vesting schedules and recent transaction records. A complete file speeds up pre-approval.
Appraisals and condo reviews
High-end homes and architecturally unique properties can require more appraisal work, especially when comparable sales are limited. For condos, ask early for HOA budgets, master insurance, and details on any special assessments. Getting documents in front of your lender quickly helps prevent late-stage surprises.
Relocation buyer tips
Remote verification is common. Lenders can verify employment electronically and coordinate appraisals while you are out of state. If you need temporary housing or a rentback after closing, coordinate timelines with your agent, escrow, and employer to avoid gaps.
Smart strategies near the conforming line
If your target loan amount is around the conforming high-cost ceiling, being one dollar over can push you into full jumbo pricing and documentation. You can sometimes adjust structure to stay within conforming guidelines by increasing your down payment slightly or pairing cash with a smaller first mortgage. If you move well above the limit, plan for jumbo underwriting, higher reserves, and a longer timeline.
Closing costs and transfer tax awareness
At higher price points, San Francisco’s tiered transfer taxes can materially increase closing costs. Add this line item early in your budget and confirm the final estimate with your escrow officer. For condos, remember to factor in monthly HOA dues and any pending special assessments, which affect both qualification and carrying costs.
Buying in a high-cost market does not have to be stressful. With the right preparation, you can move from pre-approval to a successful close on your San Francisco home. If you want a confidential, high-touch plan tailored to your goals, connect with Frank Nolan to start the conversation.
FAQs
What defines a jumbo loan in San Francisco?
- A jumbo loan is any mortgage that exceeds the FHFA conforming limit for the year, which makes it ineligible for purchase by Fannie Mae or Freddie Mac.
How much down payment do jumbo loans usually require in San Francisco?
- Many lenders look for at least 20 percent down, with 25 to 30 percent common for more competitive pricing or complex scenarios.
How are RSUs treated for jumbo mortgage qualification?
- Vested and liquidated RSUs can often count as assets, while unvested equity is usually excluded unless there is a clear vesting path and documented conversion to cash.
Will my jumbo rate be higher than a conforming rate?
- It depends on market conditions, your loan size and LTV, credit profile, and loan features, as jumbo pricing is set by lenders rather than the agencies.
How long does a jumbo purchase take to close in San Francisco?
- Expect roughly 45 to 60 days, with complex properties or very large loans sometimes taking longer due to appraisal and documentation reviews.
Can I get pre-approved remotely as a relocation buyer?
- Yes, most lenders can pre-approve you remotely, verify employment electronically, and coordinate appraisals and closing logistics while you are out of state.
