Shopping for a home in Beverly Hills and wondering how to finance it? If your loan amount sits above the limit set by federal agencies, you’ll be in jumbo territory. That can feel complex, especially with luxury properties and unique homes. In this guide, you’ll learn what counts as a jumbo loan, how lenders evaluate applications, what to expect locally in Beverly Hills, and how to prepare so you close with confidence. Let’s dive in.
What counts as a jumbo loan
A jumbo loan is a mortgage that exceeds the conforming loan limit set each year by the Federal Housing Finance Agency. Loans above that limit are not eligible for purchase by Fannie Mae or Freddie Mac and are offered by private or portfolio lenders.
In Los Angeles County, many purchases cross the conforming threshold. If your purchase price minus your down payment is above the current county limit, you’ll need jumbo financing or a different structure. Always confirm the current year’s Los Angeles County limit before you write an offer.
Why jumbo financing is common in Beverly Hills
Beverly Hills sits in one of the nation’s most expensive housing markets. Single-family homes and luxury condos often exceed conforming limits, which makes jumbo loans a common path to purchase.
Local properties can be highly customized with unique architecture and finishes. That makes valuation more complex and can lead to appraisal gaps. Planning for this possibility upfront helps you move decisively if an appraisal comes in below the contract price.
Typical jumbo requirements
Jumbo mortgages are underwritten more conservatively than conforming loans. Expect higher standards across credit, down payment, income, and documentation.
Credit standards
Lenders often reserve the best pricing for borrowers with strong credit, commonly 720 or higher. Some programs consider lower scores with tradeoffs such as higher rates or larger down payments.
Down payment and LTV
For primary residences, 10 to 20 percent down is possible in some programs, while many competitive jumbo options expect 20 to 30 percent down. Second homes and investment properties often require 25 to 30 percent or more. Stronger profiles can sometimes qualify with less down.
Debt-to-income ratio
Lenders tend to favor lower DTI ratios on jumbo loans. Many cap DTI around 40 to 45 percent, and some set lower limits as loan amounts increase.
Cash reserves
Plan for larger reserves. It’s common for lenders to require 6 to 12 months of housing payments in liquid or marketable accounts, and higher amounts may be requested for bigger loans or more complex profiles.
Documentation depth
Full documentation is the norm. Expect W‑2s and pay stubs if you’re salaried. If you’re self‑employed or have partnership income, be prepared for 2 to 3 years of personal and business tax returns, bank and investment statements, and year‑to‑date financials where applicable. Alternative documentation programs exist but typically carry higher rates or stricter terms.
Income complexity
Luxury-market buyers often have multiple income streams, including K‑1s, rental income, or investment income. Lenders may average income over several years or apply adjustments. Getting aligned on how your income will be calculated avoids surprises.
Appraisal and property eligibility
High‑end homes and one‑of‑a‑kind properties can be challenging to appraise. Lenders might require a review or even a second appraisal. Condo projects must meet lender eligibility requirements that can include owner‑occupancy, reserves, delinquency rates, and litigation status.
Choosing the right jumbo product
You have options. The right fit depends on how long you expect to hold the home, your cash flow goals, and your risk tolerance.
Fixed vs ARM
Fixed‑rate jumbos are popular if you want stable payments over 15, 20, or 30 years. Adjustable‑rate mortgages can offer a lower initial rate, which can be appealing if you expect to sell, refinance, or receive liquidity events within the initial fixed period.
Portfolio and non‑QM
Some lenders keep jumbo loans on their own balance sheets. These portfolio loans can be more flexible with complex income or unique properties. Non‑QM and specialty programs may suit nontraditional documentation profiles, though they often come with higher costs.
PMI and second liens
Traditional private mortgage insurance is usually not available for jumbo loans. Lenders typically require larger down payments or structure pricing accordingly. In some cases, a second mortgage can be used to manage the combined loan amount, but this is less common.
Rate and pricing dynamics
Jumbo rates are often slightly higher than conforming rates, though they can be competitive depending on market conditions. Pricing depends on your credit, loan‑to‑value, loan amount, and property type. It pays to compare quotes, points, and terms across multiple jumbo lenders or a mortgage broker who works this space.
Locks and float‑downs
With large loan amounts, rate locks matter. Understand lock periods, extension fees, and whether a float‑down feature is available if rates improve during escrow.
Local costs to plan for
Owning in Beverly Hills includes local taxes, insurance, and HOA items that affect your monthly budget and approval.
Property taxes and Proposition 13
California reassesses a property at sale. Expect your new assessed value to reflect your purchase price, with an annual tax bill around 1 percent of assessed value plus local assessments that vary by location. Factor supplemental tax bills into your first‑year cash flow.
Home and earthquake insurance
Lenders require homeowner’s insurance. Standard policies do not include earthquake coverage. In Los Angeles, earthquake insurance is strongly recommended. Premiums can be material and should be included in your monthly budget.
HOA and condo considerations
If you’re buying a condo, HOA dues count in your DTI. Lenders also review the project’s financials and eligibility, including reserves, owner‑occupancy, and any litigation. Additional HOA documentation can extend timelines, so plan accordingly.
Title, escrow, and timelines
California uses title and escrow companies to coordinate closings. A 30 to 45 day escrow is common, though complex income or additional appraisal reviews can add time. Work backward from any rate‑lock expiration to avoid extra fees.
How to prepare: a buyer checklist
Use this checklist to streamline your jumbo approval and protect your negotiating position:
- Check the current FHFA conforming limit for Los Angeles County to confirm if your loan will be jumbo.
- Get pre‑qualified and then fully pre‑approved with one or more lenders that regularly fund jumbo loans.
- Gather documentation early: tax returns, pay stubs, bank and investment statements, business returns, and gift letters if applicable.
- Verify lender appetite for your property type, especially for custom estates or condos with HOAs.
- Plan for reserves and potential appraisal gaps. Document proof of funds for closing costs and contingencies.
- Compare quotes, points, and features across programs. Decide between fixed and ARM terms based on your hold period.
- Budget for property taxes, homeowner’s insurance, earthquake insurance, HOA dues, and any local transfer taxes.
- Lean on an agent and appraiser who understand Beverly Hills luxury valuations to minimize surprises.
Smart negotiation and appraisal gaps
In a market with unique homes and limited comparable sales, appraisal shortfalls can happen. If an appraisal comes in low, you have options. You can increase your down payment to bridge the gap, renegotiate the purchase price, or ask the lender whether an appraisal review or a second appraisal is appropriate.
Building an appraisal contingency strategy with your lender and agent upfront keeps you in control. It also strengthens your offer because you can show sellers you have a plan if valuation comes in below contract.
Tax and wealth considerations
For many high‑value buyers, the after‑tax cost of a mortgage matters. The mortgage interest deduction for acquisition debt is capped at $750,000 for most loans originated after December 15, 2017. The cap and your personal situation can affect your tax benefit. Because portfolios differ, it is wise to coordinate with your CPA or tax advisor as you structure your down payment, loan amount, and hold period.
If you plan to refinance, pull cash out, or move equity between properties, discuss seasoning requirements and maximum loan‑to‑value rules with lenders. Portfolio lenders vary in how they handle these scenarios.
Work with an advisor who speaks finance
Jumbo financing rewards preparation. You want a team that understands both the property and the numbers. With a CPA background and boutique, hands‑on representation, Lisa aligns your financing, taxes, and long‑term goals so your Beverly Hills purchase is as strategic as it is seamless.
Ready to explore your options and build a tailored plan? Connect with Lisa Bourque for discrete, data‑driven guidance on your next move.
FAQs
What is a jumbo loan in Los Angeles County?
- A jumbo mortgage is any loan amount above the current FHFA conforming limit for Los Angeles County; amounts above that threshold require non‑conforming financing.
What credit score do I need for a jumbo loan in Beverly Hills?
- Many lenders reserve their best pricing for scores around 720 or higher, with some programs allowing lower scores at higher costs.
How much down payment is typical on a jumbo purchase?
- Primary‑residence jumbos can allow 10 to 20 percent down, though 20 to 30 percent is common and second homes or investments may require more.
Are jumbo mortgage rates much higher than conforming rates?
- Not always; spreads change with the market, and strong profiles can see competitive jumbo pricing compared to conforming loans.
Is PMI available on jumbo loans?
- Traditional PMI is usually not offered on jumbos; lenders generally require larger down payments or structure pricing to compensate.
Can self‑employed buyers qualify for jumbo financing?
- Yes, but expect thorough documentation such as multiple years of personal and business tax returns and year‑to‑date financials.
What if the appraisal comes in low on a Beverly Hills home?
- You can increase your cash to close, renegotiate price, or ask your lender about an appraisal review or second appraisal when appropriate.
How long does a jumbo closing take in California?
- Many purchases close in 30 to 45 days, though complex income, condo documentation, or multiple appraisals can add time.
Do I need earthquake insurance for a jumbo loan in LA?
- Lenders typically do not require earthquake coverage, but it is strongly recommended because standard policies do not include it.
How does the mortgage interest deduction apply to jumbo loans?
- The deduction for acquisition debt is capped at $750,000 for most post‑2017 loans; consult your tax advisor to understand your specific benefit.
