In most of the country, a “conforming” loan — one that meets Fannie Mae and Freddie Mac guidelines — maxes out at $806,500 in 2025 (higher in certain high-cost areas). Need to borrow more than that? You’re in jumbo territory, and the rules change significantly.
What Makes Jumbo Loans Different
Jumbo loans aren’t sold to Fannie Mae or Freddie Mac. They stay on a lender’s balance sheet or are sold to private investors — which means every lender sets its own guidelines. There’s no single standard. That’s both a challenge and an opportunity: the right lender can offer significant flexibility, but finding that lender requires expertise.
Underwriting tends to be more rigorous than for conforming loans. Lenders want to see stronger credit profiles, lower debt-to-income ratios, and more substantial reserves. For a $2M loan, many lenders will require 12–24 months of mortgage payments in verified liquid reserves — on top of the down payment.
Common Jumbo Loan Scenarios We Handle
- Primary residence purchases in high-cost markets like San Diego, Orange County, Los Angeles, and the Bay Area
- Second homes and vacation properties for clients who want to maintain their primary investment portfolio
- Rate-and-term refinances for clients who purchased in cash and want to recapitalize
- Cash-out refinances to fund business opportunities or investment vehicles
- Delayed financing for clients who bought with cash and want to pull equity back out shortly after closing
Income Documentation in Jumbo Lending
Jumbo lenders have more flexibility on income documentation than conforming lenders — and that’s particularly valuable for high-net-worth borrowers whose income doesn’t fit a standard mold. Many private jumbo investors accept bank statement qualification, asset-depletion income, and alternative documentation that conforming loans won’t allow.
The key is finding the right investor for your specific situation. A borrower with $8M in assets and minimal W-2 income needs a different jumbo product than a corporate executive with $600,000 in annual compensation. Having access to multiple jumbo investors — rather than being limited to one bank’s in-house portfolio — makes a significant difference in rate and terms.
Reserves: The Number That Surprises People
The reserve requirement is often the part of jumbo underwriting that catches buyers off guard. It’s not enough to have the down payment and closing costs covered — you also need to demonstrate liquid reserves equal to 12–24 months of principal, interest, taxes, and insurance (PITI). For a $2M loan with a $10,000 monthly payment, that can mean showing $120,000–$240,000 in additional verifiable liquid assets.
Retirement accounts often count, depending on the lender and your age. Investment portfolios usually count at 60–70% of their value (discounted for potential market movement). Knowing what counts and what doesn’t — and structuring your documentation accordingly — is part of what a specialist does before you ever go to underwriting.
Coordinating with Your Financial Advisor
Jumbo lending at this level works best when your mortgage specialist and financial advisor are aligned. Reserve sourcing, down payment strategy, and the decision between an all-cash purchase versus financing are all questions that touch both sides of your financial picture. The right team gets to a better answer faster.
If you’re exploring a purchase or refinance that will require a jumbo loan, I’d welcome the chance to review your situation. Contact me at jeff@saxtonmortgage.com or (949) 344-1717.