Conforming vs. Jumbo: Financing Lafayette Homes

Shopping in Lafayette and unsure if your mortgage will be conforming or jumbo? You are not alone. With many local homes pricing well above national norms, your loan type can shape everything from your down payment to your closing timeline. In this guide, you will learn the 2025 limits that apply in Lafayette, how conforming and jumbo loans differ, and how to position your offer so it stands out. Let’s dive in.

Conforming vs. jumbo basics

Conforming loans meet Fannie Mae and Freddie Mac standards and must stay at or below the Federal Housing Finance Agency’s conforming loan limit. For 2025, the national baseline for a one‑unit home is $806,500, and the high‑cost ceiling is $1,209,750. Loans above the applicable county limit are considered jumbo. You can review the official numbers in the FHFA’s 2025 announcement.

Lafayette is in Contra Costa County, which uses the high‑cost ceiling for 2025. That means a one‑unit conforming loan can go up to $1,209,750 in our county. Local lender tables confirm the Contra Costa limit at this level for 2025, so anything higher is a jumbo loan. See a county breakdown here: California 2025 conforming limits by county.

Will you need a jumbo in Lafayette?

Because many Lafayette homes sell well above one million dollars, a large share of buyers end up in jumbo territory unless they make a substantial down payment. The quickest way to tell is to run the math: price minus down payment equals your loan amount. If the result is more than $1,209,750, you are in jumbo land.

Here are simple examples to illustrate:

• $1,200,000 price with 20% down → $960,000 loan → conforming in Contra Costa.
• $1,800,000 price with 20% down → $1,440,000 loan → jumbo.
• $2,500,000 price with 20% down → $2,000,000 loan → jumbo.

Use the FHFA conforming limit as your cutoff.

How the loans differ

Credit score and down payment

Conforming programs can accept lower credit scores in some cases, while jumbo loans usually expect stronger credit. Many competitive jumbo programs look for scores around 700 or higher, although some options exist a bit lower with strong compensating factors. Review common jumbo standards in this 2025 jumbo guide.

Down payments also tend to be larger for jumbo financing. While conforming can go low with special programs, jumbo options commonly expect 10% to 20% down, depending on your profile.

DTI, cash reserves, and documentation

Jumbo lenders often want lower debt‑to‑income ratios than conforming and they typically require more months of cash reserves. Six to twelve months of total housing payments in reserves is common at higher loan amounts. Be ready to document assets thoroughly with bank and brokerage statements. See typical reserve and documentation expectations in the same jumbo overview.

Appraisal scrutiny and PMI

For larger balances, lenders tend to scrutinize value more closely and may order additional valuation work. Plan for a thorough appraisal process, especially on unique or high‑priced properties. Learn what to expect in this summary of jumbo appraisal guidelines.

PMI works differently, too. Conforming loans typically require private mortgage insurance if your down payment is under 20%, unless you use a structure like an 80/10/10 piggyback. Jumbo loans usually do not use PMI, and the lender prices risk into the rate or down payment requirements. You can read more about piggyback options here: how an 80/10/10 works.

What about rates in 2025?

Mortgage rates move with the broader market and can change weekly. Recent reporting captures the trend that averages are higher than the ultra‑low levels of a few years ago, and they fluctuate with Treasury yields and Fed policy. For current context, see this national mortgage rate update.

Which is cheaper, jumbo or conforming? It depends. In some periods, banks compete aggressively for jumbo loans and price them close to or even below conforming. In other periods, jumbos run higher. The spread changes with investor demand and bank funding. In short, shop around. Here is a useful explainer on the shifting relationship between jumbo and conforming rates.

Smart moves for Lafayette buyers

• Get fully pre‑approved early. A verified pre‑approval with document review is stronger than a quick pre‑qualification and helps your offer land well with sellers. See what lenders verify in this guide to mortgage pre‑approval.
• Compare lenders, not just rates. In the Bay Area, portfolio banks, credit unions, and mortgage brokers compete on jumbo terms. Ask about reserves, documentation, turn times, fees, and rate‑lock policies.
• Consider structure tradeoffs. An 80/10/10 can avoid PMI or keep your first mortgage conforming, but it adds a second lien and complexity. Weigh total cost and simplicity against the benefit. Review the basics of 80/10/10 piggybacks.
• Plan for appraisal risk. With jumbos, valuations face closer review. Build realistic appraisal and financing contingencies into your offer timeline and discuss appraisal‑gap strategies up front. See common jumbo appraisal expectations.

Tips for Lafayette sellers

• Weigh financing strength, not just price. Cash is strongest, followed by verified pre‑approval or a full underwrite, then standard pre‑approval, then pre‑qualification. Jumbo buyers with clear proof of reserves and a reputable lender often pose less risk. For a quick overview of what a strong pre‑approval includes, review this pre‑approval checklist.
• Ask about timelines. Jumbo underwriting and appraisals can run longer. Have your agent contact the buyer’s lender for expected turn times so you can set realistic contingency periods.
• Budget taxes into buyer affordability. California property taxes are governed by Proposition 13, which sets a base 1% rate of assessed value plus voter‑approved local assessments. Buyers will factor this into monthly costs, and it can influence offers.

Quick mini‑guide: conforming or jumbo?

Use this simple two‑step test before you write an offer:

1. Estimate your loan amount. Price minus your planned down payment equals your first‑mortgage amount.
2. Compare to the county limit. If your loan is at or below $1,209,750, it can be conforming in Contra Costa County. If it is higher, plan for jumbo underwriting. Confirm the latest limits in the FHFA release and county listings like this California table.

Ready to map a financing plan to your Lafayette search or to vet offers on your home? Connect with Glen Dsouza to align your budget, loan strategy, and offer terms so you can move with confidence.

FAQs

What is the 2025 conforming loan limit for Lafayette, CA?

• Lafayette is in Contra Costa County, which uses the high‑cost ceiling of $1,209,750 for a one‑unit home in 2025, per the FHFA’s announcement.

How big a down payment keeps a $1.6M purchase conforming?

• You would need to keep the loan at or below $1,209,750, so about $390,250 down, which is roughly 24% of $1.6M.

Do jumbo loans require PMI in Lafayette?

• Jumbo loans usually do not use PMI. Lenders price risk into the rate and terms, and some buyers use an 80/10/10 piggyback to avoid PMI on conforming loans. See how 80/10/10s work.

Are jumbo mortgage rates always higher than conforming?

• No. Pricing changes with market conditions and bank appetite. At times, jumbo rates have been similar to or even below conforming. Here is a primer on the shifting jumbo vs. conforming rate spread.

How long do jumbo loans take to close?

• Timelines vary by lender, but jumbo underwriting and appraisals can take longer due to more documentation and valuation review. Ask for lender turn times before setting contingency dates.

How do property taxes affect my Lafayette payment?

• California’s Proposition 13 sets a base 1% of assessed value plus local assessments. Include this in your monthly payment estimate when comparing homes and loan options.