Shopping for a Cambria home and hearing the word “jumbo” from your lender? You are not alone. Coastal prices and second-home demand often push buyers above standard loan limits, which changes how lenders underwrite your mortgage. In this guide, you will learn what jumbo financing is, how to check loan limits for San Luis Obispo County, what lenders look for, and how to navigate appraisals on the coast. Let’s dive in.
Jumbo vs. conforming: what it means in Cambria
A conforming loan meets size and guideline standards set for purchase by Fannie Mae and Freddie Mac. The key threshold is the county conforming loan limit. If your loan amount goes above that limit for San Luis Obispo County, it becomes a non-conforming or “jumbo” loan.
Jumbo is a category, not a single product. Since these loans do not carry a GSE guarantee, lenders set pricing and rules differently. That is why you may see different rates, reserve requirements, and documentation across lenders.
Cambria’s coastal market has a healthy share of second homes. When typical purchase prices exceed the county limit, you are more likely to need jumbo financing. Knowing where you stand early helps you plan your down payment, reserves, and timeline with confidence.
Conforming loan limits: how to check yours
The Federal Housing Finance Agency updates conforming loan limits each year. Limits vary by county, so the effective cap for a Cambria property is the San Luis Obispo County limit for the current year.
Do not rely on last year’s figure. Limits change, and a loan that was conforming last year can be jumbo this year. To confirm where you stand, check the current county conforming loan limits on FHFA.gov or ask your lender to verify.
You can also review related guidance from the GSEs. Fannie Mae and Freddie Mac publish pages that tie back to FHFA’s limits. If you want an extra layer of confirmation, see Fannie Mae’s overview of conforming loan limits and Freddie Mac’s loan limits page.
Why Cambria buyers often go jumbo
Cambria’s mix of ocean-view homes, village properties, and rural-feeling neighborhoods can create a price profile that differs from the broader county. Second-home activity and limited inventory also mean fewer comparable sales at the higher end.
When purchase prices rise above the county limit, jumbo financing fills the gap. If you are buying a second home or moving up from a lower-priced primary residence, plan for the possibility of a jumbo loan and the stricter underwriting that can come with it.
Jumbo underwriting: what lenders look for
Jumbo loans are often kept on a bank’s balance sheet or sold to private investors. Lenders typically apply tighter rules and require more documentation. Here is what you can expect.
Credit score and DTI
Many jumbo lenders prefer a strong credit profile, often in the mid-700s or higher. Some will consider lower scores with compensating factors. Debt-to-income ratios can be similar to conforming loans, but jumbo underwriting often places greater weight on assets and reserves.
Down payment and reserves
Down payments for jumbo loans are usually higher. Many lenders expect 10 to 20 percent down for a primary residence. For second homes or investment properties, requirements often rise to 20 percent or more, and 25 percent or more is common with some lenders.
Reserve requirements are also common. You may be asked to show several months of mortgage payments in liquid assets after closing. Expect higher reserve expectations for second homes and larger loan amounts.
Documentation
Plan for full documentation. Two years of tax returns, recent pay stubs, W-2s or 1099s, bank and asset statements, and explanations for large deposits are standard. Self-employed buyers may see additional documentation requests, or they may consider bank-statement or alternative documentation programs that come with different costs and down payment rules.
Appraisals and pricing
Jumbo appraisals can be more rigorous, especially for unique coastal homes. Appraisal fees can be higher, and some lenders order a second review. Rates and points vary by lender and market conditions, so it pays to shop. Product types include fixed-rate, ARMs, and portfolio loans with more flexible underwriting.
Second homes and move-up plans
If you are buying a second home, expect stricter terms than a primary residence. Lenders often require higher down payments and more reserves. Investment properties are underwritten even more conservatively.
Move-up buyers should plan for the possibility of carrying two mortgages temporarily. Lenders usually count the projected payments on both homes in your DTI unless you can document a pending sale with a firm contract and meet the lender’s requirements for excluding the payment. You can soften this transition by considering bridge loans, a HELOC on your current home, or an offer contingent on the sale of your existing property. Each option has tradeoffs that affect your risk, speed, and negotiating power.
If you are considering FHA or VA programs instead of conventional financing, know that they have separate rules and limits. You can review FHA county limits via the FHA mortgage limits search tool and learn more about VA home loan eligibility on the U.S. Department of Veterans Affairs site.
Appraisals on Cambria’s coast
Coastal properties often come with unique features, which makes valuation more complex. Ocean frontage, bluff versus inland views, site stability, and access can all affect price and risk. Appraisers may need to draw comparables from a wider area or use older sales when recent high-end comps are limited.
Lenders sometimes take a more conservative approach on these homes. That can mean lower loan-to-value caps, additional inspections, or a review appraisal. Build time into your contract to handle appraisal steps and consider a plan for potential shortfalls.
Choosing a lender who knows jumbo
Not every lender is active in jumbo markets. Local banks, regional lenders, and mortgage brokers often offer a wider range of jumbo and portfolio products. A lender who understands coastal valuation and second-home reserves can set expectations clearly.
Ask lenders about their overlays. These are rules that go beyond baseline guidelines and can affect your down payment, reserves, DTI, or appraisal conditions. Getting a realistic preapproval early can save time and surprises later.
Step-by-step plan for Cambria buyers
Follow this simple sequence to put your best foot forward.
- Verify your limit
- Check the current county conforming limit on FHFA.gov to see whether your target price will require jumbo financing.
- Speak with a jumbo-capable lender
- Get preapproved with a lender that regularly closes jumbo loans. Ask about down payment, reserves, DTI, and appraisal requirements for second homes if that applies to you.
- Gather documents
- Prepare two years of tax returns, W-2s or 1099s, recent pay stubs, bank and asset statements, explanations for large deposits, and any letters that clarify credit or employment gaps.
- Plan your transition
- If you are moving up, discuss whether you will carry two mortgages, use a bridge loan or HELOC, or make your offer contingent on selling your current home. Weigh the impact on your DTI and your negotiating position.
- Assess appraisal risk
- For unique coastal properties, talk with your agent and lender about potential appraisal challenges and timeline. Consider a plan for appraisal shortfalls or additional inspections if the home is on or near a bluff.
- Match product to your timeline
- Compare fixed-rate, ARM, and portfolio options based on how long you plan to hold the loan. If you expect a refinance or sale in a set window, an ARM may have a lower initial rate, but understand the rate reset risk.
Common risks and how to manage them
- Liquidity after closing. Jumbo loans can require several months of reserves, which reduces your cash cushion. Build this into your budget early.
- Interest-rate sensitivity. Jumbo ARMs can reset, so understand your timeline for holding the property. Fixed rates can be higher at the start, but they remove future rate risk.
- Appraisal shortfalls. Unique Cambria homes are more likely to appraise below the contract price. Consider strategies such as adjusting contingencies, negotiating credits, or increasing down payment if needed.
Work with a local guide
Your path to the right Cambria home gets easier when your agent, lender, and appraiser understand coastal dynamics. A seasoned local team can help you set realistic expectations on price, appraisals, and timelines, then coordinate the moving parts of a jumbo preapproval.
If you are weighing a second home, searching for a move-up property, or planning how to manage two mortgages, reach out to a local partner that can guide your purchase and long-term ownership. Connect with Franklin Real Estate & Rentals to talk through your goals and next steps.
FAQs
What is the difference between conforming and jumbo loans?
- Conforming loans meet county loan limits set by FHFA and can be purchased by Fannie Mae or Freddie Mac, while jumbo loans exceed the limit and follow lender-specific rules.
How can I tell if my Cambria purchase needs a jumbo loan?
- Subtract your planned down payment from the purchase price, then compare the loan amount to the current San Luis Obispo County limit on FHFA’s site; if it is over, it is a jumbo.
Do jumbo loans always cost more than conforming loans?
- Jumbo loans can carry higher rates and require larger down payments and reserves, but pricing varies by lender and market conditions, so it pays to shop.
What changes if I am buying a second home in Cambria?
- Lenders often require higher down payments and more reserves for second homes, and underwriting can be stricter than for a primary residence.
How do move-up buyers handle two mortgages during a purchase?
- Lenders usually count both payments in your DTI unless you have a firm contract to sell your current home, so consider bridge loans, a HELOC, or a contingent offer.
