Above a certain price, the mortgage market changes. Here is how financing works once San Diego prices push past conventional limits.

Conforming vs. jumbo: the line that matters

Conventional loans backed by Fannie Mae and Freddie Mac have a maximum size — the conforming loan limit. Anything above it is a jumbo loan, with its own underwriting rules.

2026 · San Diego County · 1-unit properties — $1,104,000 conforming limit. Source: Federal Housing Finance Agency (FHFA) 2026 limits. San Diego County is a designated high-cost area; the national baseline is $832,750. Loans above $1,104,000 are jumbo.

With San Diego’s median around $960,000 and luxury neighborhoods well above it, a large share of local purchases cross into jumbo territory. That is normal here — jumbo lending is a deep, competitive market in San Diego.

What changes with a jumbo loan

Jumbo lenders take on more risk per loan, so they ask for more from the borrower:

  • Stronger credit — most jumbo programs want scores of 700–720 or higher, with the best pricing reserved for 740+.
  • Larger reserves — expect to document 6–12 months of mortgage payments in liquid reserves after closing.
  • Lower debt-to-income ratios — many jumbo lenders cap DTI around 38–43%, tighter than conventional programs.
  • Full documentation — two years of tax returns, W-2s or 1099s, and a clear paper trail for large deposits. Self-employed borrowers should plan for extra scrutiny.

Rate locks: timing the commitment

A rate lock fixes your interest rate for a set period — typically 30 to 60 days — while your loan is processed. What to know:

  • Lock when you have an accepted offer — floating before that is speculation; most buyers lock within days of going under contract.
  • Match the lock to your timeline — a 30-day lock is cheapest, but if closing slips past it, extension fees apply. New construction or complex transactions may need 60–90 days.
  • Longer locks cost more — lenders price extended locks into the rate, so don’t over-buy time you don’t need.
  • Ask about float-down options — some lenders offer a one-time rate reduction if market rates drop significantly during your lock.

Down payment strategies at luxury price points

On a $2M purchase, every 5% of down payment is $100,000 — so the strategy matters:

  • 20% down remains the standard — it avoids private mortgage insurance and gets the cleanest pricing on jumbo loans.
  • 10–15% down jumbo programs exist — several lenders offer them for strong borrowers, sometimes with slightly higher rates.
  • Asset-based qualification — some jumbo programs qualify borrowers on liquid assets rather than income (useful for retirees and business owners).
  • Keep reserves intact — stretching to a bigger down payment at the cost of your safety net can backfire in underwriting.

Debt-to-income and reserves: what lenders want to see

Two numbers carry outsized weight in jumbo underwriting. Debt-to-income (DTI) compares your monthly debts to gross monthly income — jumbo lenders generally want it under 43%, and lower is better. Reserves are the liquid funds remaining after closing — retirement accounts, savings and investments count. Six months of total housing payments is a common minimum; twelve is comfortable.

This page is educational information only — not financial, tax or legal advice. Loan programs, limits and requirements change; confirm everything with a licensed mortgage lender before making decisions. Nishant Sehgal is a licensed California real estate salesperson (CA DRE #02041253), not a mortgage lender or broker.