Buying in Palo Alto usually means shopping at price points above standard lending limits. If you are a high‑earning tech or professional buyer, you may need a jumbo mortgage to compete. It can feel complex at first, especially if your income includes RSUs, bonuses, or partnership draws. This guide breaks down how jumbo loans work in Santa Clara County, how they differ from conforming loans, and what to prepare before you write an offer. Let’s dive in.
What counts as a jumbo in Palo Alto
A jumbo loan is any mortgage amount above the conforming loan limit for the county where the property is located. Conforming limits are set each year and vary by county. Loans at or below that limit are eligible for purchase by Fannie Mae or Freddie Mac. Anything above is considered “non‑conforming” or jumbo.
Santa Clara County is a high‑cost area. Home prices in Palo Alto often exceed the conforming threshold, so many buyers use jumbo financing. Because limits update annually, confirm the current county limit with your lender when you start pre‑approval.
How jumbo loans differ from conforming
Jumbo loans follow different underwriting rules than conforming conventional loans. Here is what that usually means for you.
Credit, DTI, and reserves
Most jumbo lenders look for strong credit, often a 720+ score for best pricing. Debt‑to‑income (DTI) ratios are applied conservatively, commonly in the 43% to 45% range depending on your profile. You should also expect higher cash reserve requirements, often 6 to 12 months of PITI. Very large loans may require more.
Down payment and LTV
Plan for 20% to 25% down as a baseline for many jumbo programs. Larger loan sizes, unique properties, or risk factors can push required down payment higher. Some portfolio or private bank programs offer higher LTV options, but terms and pricing may be stricter.
Documentation and income types
Jumbos are usually full‑documentation loans. Expect to provide two years of tax returns, W‑2s, recent pay stubs, and bank and brokerage statements. If you are self‑employed or earn 1099 income, you will need additional documentation.
Stock compensation is common in Silicon Valley and requires careful treatment. Vested and liquidated RSUs are easier to count as income or assets. Future vesting may count only when there is a documented history and a stable schedule. Lenders will also ask for a paper trail on large deposits, gifts, and asset transfers.
Rates, points, and fees
Jumbo rates can be slightly higher than conforming or very competitive, depending on market conditions and your lender’s balance‑sheet strategy. Because loan amounts are large, even small rate differences matter. Compare options for paying points to reduce the rate versus taking lender credits to offset closing costs.
Mortgage insurance and LTV options
Traditional PMI is not always available for higher jumbo sizes. Lenders may require lower maximum LTVs instead of using PMI. Alternatives can include split financing with a second mortgage or using a portfolio lender program. Your options will vary by lender and profile.
Appraisals and property types
High‑value and unique homes often require more detailed appraisals. Some transactions need two appraisals or a specialty review, which can add time. For condos, the building’s status matters. Warrantable buildings are easier to finance. Non‑warrantable properties may require a portfolio lender or a larger down payment.
Lenders to consider
- National and regional banks: Standard jumbo programs with clear guidelines.
- Mortgage brokers: Access to multiple lenders and pricing models.
- Portfolio and private banks: More flexibility for complex income or high‑asset profiles because they can hold loans in‑house.
Silicon Valley realities for high earners
Common hurdles to plan for
- High payment vs. documented income: Strong assets with lower W‑2 income can create DTI constraints. Asset depletion methods or RSU history may help.
- Stock compensation: Vested and regularly sold RSUs are easier to count. Unvested options usually do not count as income.
- Asset seasoning: Lenders will request documentation for recent large deposits and may require gift letters when applicable.
- Appraisal gaps: Unique or custom properties can make valuations less predictable and extend timelines.
- Condo approval: Older or small associations can be non‑warrantable. You may need a portfolio lender or a higher down payment.
Smart strategies that work here
- Increase your down payment to reduce the loan amount or reach better pricing tiers.
- Consider split financing when available to optimize LTV and costs.
- Explore portfolio or private banking if you have complex income, significant assets, or relationship banking needs.
- Use cash strategically to strengthen your offer and simplify underwriting.
- Compare multiple lenders and lock strategies because small rate changes are meaningful on jumbo balances.
Your pre‑approval game plan
Good preparation speeds up underwriting and improves your negotiating position. Start early and gather all documents your lender will need.
Quick checklist
- Confirm the current conforming loan limit for the property’s county.
- Target a 720+ credit score for best pricing.
- Plan for 20% to 30%+ down, especially for very large loans or unique homes.
- Verify 6 to 12+ months of PITI in liquid reserves.
- Collect two years of tax returns, pay stubs, and W‑2s or 1099s.
- Gather bank and brokerage statements and document RSU vesting and sale history.
- Ask about condo or HOA review requirements and appraisal timelines.
- Compare national banks, regional banks, brokers, and portfolio/private banks.
- Coordinate pre‑approval early and share your lender contact with your agent.
Documents to gather
- Two years of personal tax returns and any relevant schedules.
- Two years of W‑2s and the last two to three months of pay stubs.
- Two to twelve months of bank statements for liquid accounts.
- Brokerage and retirement account statements for assets and reserves.
- RSU agreements, vesting schedules, and records of sales or grants.
- 1099s, K‑1s, and business returns for self‑employed or partnership income.
- Gift letters and donor documentation if you will use gifted funds.
- Letters of explanation for large deposits, credit inquiries, or employment gaps.
- For condos, HOA documents and financials once you are in contract.
Questions to ask lenders
- What minimum credit score and reserve levels do you require at my target loan size in Santa Clara County?
- How do you treat RSUs, sign‑on bonuses, and 1099 or consulting income?
- Do you offer interest‑only, ARM, or other portfolio jumbo options that fit my goals?
- What is the typical appraisal and underwriting timeline for Palo Alto homes at my price point?
- How do you handle condos and non‑warrantable buildings? What alternatives exist?
- What documentation do you require for gifts and asset transfers?
Timing and closing expectations
Jumbo transactions often require a bit more time. Expect thorough documentation requests and longer appraisal turnarounds for high‑value or unique properties. A common range is 30 to 45+ days from contract to close, although some portfolio lenders can move faster when files are complete early.
Rate and lock strategy
Because loan balances are large, small rate movements have a big impact on your total cost. Ask each lender to model scenarios with and without points, different lock periods, and potential lender credits. Compare the full picture: rate, fees, and monthly payment along with reserve and documentation requirements. If you are negotiating closing timelines, confirm how your lock length aligns with appraisal and underwriting expectations in this market.
Partner with a local team
Your financing plan should fit your goals, your income profile, and the property type. If you want introductions to lenders who understand jumbo financing, portfolio lending, and stock compensation, we can coordinate tailored options and help you compare terms. When your financing is aligned early, your offer is more competitive and your path to close is smoother.
Ready to map out your plan? Reach out to the The Fallant Team to schedule a consultation and coordinate lender introductions that fit your situation.
FAQs
What is a jumbo loan for a Palo Alto home purchase?
- A jumbo loan is any mortgage above the county’s conforming loan limit. In Palo Alto’s Santa Clara County, many buyers exceed that threshold and use jumbo financing.
Are jumbo mortgage rates always higher than conforming?
- Not always. Jumbo rates can be similar or even lower than conforming rates depending on market conditions and a lender’s strategy. Get quotes to compare.
How much cash do I need in reserves for a jumbo?
- Most lenders ask for 6 to 12 months of PITI in verified liquid reserves. Very large loans or higher risk profiles may require more.
Can RSUs count toward qualifying for a jumbo loan?
- Often yes, but treatment varies. Vested and regularly sold RSUs are easier to count as income or assets. Unvested options typically are not counted as income.
What if my condo is non‑warrantable in Palo Alto?
- Many conventional lenders will not finance non‑warrantable condos. Portfolio or private lenders may be options, sometimes with larger down payments.
What happens if the appraisal comes in low on a unique property?
- You may bring more cash, renegotiate price, or request a second appraisal or review. Unique homes with limited comps can create valuation challenges.
