Buying on the Westside often means shopping in price ranges where most loans are jumbo. If you are eyeing a Santa Monica home, you may be wondering how jumbo financing works, what lenders expect, and how to prepare. You are not alone, and the process can feel complex at first. This guide breaks down what counts as a jumbo loan here, how underwriting differs from conforming loans, and practical steps to get truly offer ready. Let’s dive in.
Jumbo basics in Santa Monica
Los Angeles County is a high-cost area for conforming loan limits. For 2024 the baseline one-unit conforming limit was $766,550, and high-cost counties like Los Angeles used a higher one-unit limit of $1,149,825. Any loan amount above the applicable county limit is considered a jumbo loan because it is not eligible for purchase by Fannie Mae or Freddie Mac. These limits change annually, so confirm the current year’s numbers before you begin.
In Santa Monica and nearby Westside neighborhoods, many homes are priced above the high-cost conforming limit. That means you will likely use a jumbo loan, combine financing with a larger down payment, or both. Early contact with a lender that regularly underwrites jumbos helps you move faster and write stronger offers.
Rates and costs 101
Jumbo pricing is not one-size-fits-all. The rate you see depends on your credit score, down payment and loan-to-value ratio, debt-to-income ratio, loan amount and product type, and the lender you choose. In favorable scenarios, the spread between a conforming 30-year fixed and a jumbo 30-year fixed can be small or a few tenths of a percent. Lower credit scores, higher LTVs, or alternative documentation usually push rates and fees higher.
Expect more detailed fee tables with jumbos. Lenders may charge higher origination costs and require more expensive appraisals or valuation reviews. Always compare APR, not just the rate, and request a clear itemization of lender fees and third-party costs.
Underwriting expectations
Jumbo underwriting is more detailed than conforming in most cases. Here is what lenders typically want to see for Westside purchases:
- Credit strength: Many programs price best for credit scores in the mid-700s or higher. Some lenders allow high-600s, often with higher costs.
- Down payment and LTV: Primary residence jumbos commonly go to 80–90% LTV. The most conservative pricing is often at 75–80% LTV. Second homes and investment properties usually require larger down payments.
- Debt-to-income (DTI): Many jumbo programs target a DTI at or below 43% for best pricing. Higher DTIs may be possible with strong compensating factors.
- Reserves: Lenders often require documented reserves measured in months of PITI. Six months is common for primary homes, and 12 months or more is typical for larger loans or higher LTVs. Retirement accounts may be discounted for reserve purposes.
- Income verification:
- W-2 employees provide two years of W-2s, recent paystubs, and employer verification. Tax returns may be needed if bonus or commission income matters.
- Self-employed borrowers usually provide two years of personal and business tax returns. Some lenders offer bank-statement jumbos using 12–24 months of statements, typically with higher rates and lower LTV caps.
- Assets and sourcing: Large down payments must be sourced with bank, brokerage, or retirement statements. Proceeds from another sale need settlement statements and transfer records.
- Gift funds: Many jumbo programs permit gift funds for primary residences with a gift letter and transfer documentation. Gifted funds may affect reserve calculations.
Appraisals and escrow in LA
For jumbo loans, full interior and exterior appraisals are standard, and lenders prefer appraisers with high-value property experience. A second appraisal or appraisal review may be required on higher-risk or higher-loan-amount files. While desktop or hybrid valuations exist, full appraisals are the norm for Westside luxury homes due to unique attributes.
California closings are escrow-based. Expect title insurance and standard escrow fees, with lenders specifying coverage limits and endorsements for higher-value transactions. Your lender and escrow officer will outline the exact requirements for your file.
Choose your lender partner
Different lender types serve jumbo buyers well for different reasons. Consider your profile and priorities:
- National banks: Broad product menus and competitive pricing for strong files, with robust online tools.
- Regional banks and credit unions: Often competitive and nimble, sometimes with faster local underwriting.
- Portfolio lenders and private banks: Hold loans on their balance sheets, so they can be more flexible with unique incomes or property types. Rates and terms vary.
- Mortgage brokers: Can shop multiple wholesale lenders and place complex files for self-employed or high-asset borrowers.
Pre-approval vs. pre-qualification
For competitive Westside offers, a full pre-approval or pre-underwritten letter is stronger than a basic pre-qualification. Seasoned jumbo lenders may issue conditional approvals subject only to appraisal and title. This helps sellers feel confident about your financing.
Timing and contingencies
Jumbo underwriting can be more document-heavy and sometimes slower, especially on appraisals. Coordinate financing contingency timelines with your lender and agent. Be prepared to show proof of funds for your down payment and reserves when you submit offers.
Santa Monica jumbo prep checklist
Gather these items before you tour homes:
- Two years of personal tax returns and all schedules; business returns if applicable
- W-2s and recent paystubs for W-2 borrowers
- Bank statements for 2–3 months, or 12–24 months for bank-statement programs
- Retirement and investment statements, seasoned 60–90 days, plus a plan for any needed liquidations
- Documentation for sale of other property or large deposits
- Credit authorization for a tri-merge credit report
- Government ID for identity verification
As you interview lenders, ask:
- What is your maximum loan size, and do you have a local Westside or LA underwriting desk?
- What credit score, DTI, and reserve levels are assumed in your quoted rate?
- What income and asset documentation do you need? Can you use bank statements if I am self-employed?
- What appraisal type and turnaround should I expect for Santa Monica properties in this range?
- Do you offer rate locks? What are the lock terms and costs?
Other tips:
- Strong pre-approval letters that document income, assets, and reserves can ease seller concerns.
- Consider a local mortgage broker or a bank with a Westside presence to help coordinate appraisal and underwriting logistics.
Smart financing options to consider
Every file is different. If you need more flexibility, there are alternatives:
- Portfolio loans: Useful for non-traditional income or unique properties. Often carry higher rates but offer tailored terms.
- Bank-statement programs: Helpful for high-income self-employed buyers whose tax returns understate cash flow. Expect tighter LTV limits and higher pricing.
- Bridge loans: Short-term funding to buy before you sell. Costs are higher and timelines are shorter, so plan carefully.
- HELOCs and second liens: Can supplement your down payment or create combined financing. Understand how a second lien affects the primary jumbo’s underwriting.
The bottom line for Westside buyers
In Santa Monica and the Westside, jumbo loans are common and very workable when you plan ahead. Focus on credit strength, realistic LTV, clear reserves, and full documentation. Pair that with a lender experienced in jumbo underwriting and a strong pre-approval, and you will write more compelling offers with fewer surprises. If you want a local strategy session tailored to your goals, connect with Laura Brau for discreet, high-touch guidance.
FAQs
What defines a jumbo loan in Santa Monica?
- Any loan amount above Los Angeles County’s current one-unit conforming loan limit is considered a jumbo loan, since it is not eligible for Fannie Mae or Freddie Mac purchase.
How much down payment is typical for a jumbo loan?
- Many primary residence jumbo programs go to 80–90% LTV, with the most favorable pricing often at 75–80% LTV; second homes and investment properties usually require larger down payments.
What credit score do I need for a jumbo mortgage?
- Programs vary by lender, but the best pricing often starts in the mid-700s; some lenders accept high-600s with higher rates and tighter terms.
How long does a jumbo loan take to close in Santa Monica?
- Timelines vary, but jumbo files can take longer due to document depth and appraisals; coordinate appraisal lead times and financing contingencies with your lender and agent.
Should I get pre-approval or pre-qualification for a Westside home?
- A full pre-approval or pre-underwritten letter is stronger than a basic pre-qualification and helps sellers feel confident about your financing.
