What's the best type of mortgage loan to use when buying a home in the…
It’s no surprise that the San Francisco Bay Area is an expensive real estate market. In fact, we have some of the priciest homes in the country on average.
As a result, home buyers and mortgage shoppers often wonder how much they will be able to borrow. A common question among this group is: What’s the biggest mortgage loan I can get in the Bay Area?
The maximum mortgage size can vary from one borrower to the next, because it is primarily based on income and debt. Here in the San Francisco Bay Area, well-qualified borrowers with sufficient income can often take on mortgage loans up to several million dollars.
What’s the Biggest Mortgage Loan in the Bay Area?
The biggest mortgage loan you can obtain for a Bay Area home purchase will largely depend on your income and debt situation. But there are some other important factors at work here, as well. So let’s explore them.
Jumbo Versus Conforming Loans
When shopping for a mortgage loan in the Bay Area, it’s important to understand the difference between conforming and jumbo home loans. And the primary difference has to do with their size.
A conforming loan is one that meets or “conforms” to the purchase requirements used by Fannie Mae and Freddie Mac. There are specific size limits for conforming loans, and they are established by the Federal Housing Finance Agency. Conforming loans are generally easier to qualify for because they can be sold into the secondary mortgage market.
A jumbo loan, on the other hand, is one that exceeds the conforming loan limit for the county where the home is located. The biggest mortgage loans in the Bay Area fall into the jumbo category, for this very reason. They exceed the county-specific limits mentioned above.
The qualification requirements for a jumbo loan tend to be a bit more strict, due to the larger mortgage size. But a well-qualified borrower with sufficient income should have no trouble qualifying for a jumbo home loan.
The All-Important ‘DTI’ Ratio
To recap, the biggest mortgage loan here in the Bay Area can vary among borrowers due to income-related factors. A borrower with a higher-than-average income level will likely qualify for a bigger mortgage loan, compared to someone with a median or average income.
The debt-to-income ratio plays a role here as well. Also known as the DTI, this percentage compares the amount of money a person earns to the amount they spend to cover their recurring debts. The total or “backend” debt-to-income ratio includes all recurring debts, including the monthly mortgage payment, credit cards, car loan, etc.
This is one of the factors that determine the biggest mortgage amount you can get in the Bay Area. The goal here is to prevent you from getting too deep into debt, given the addition of the mortgage loan. In short, the DTI ratio helps reduce risk for both the borrower and the lender alike.
There is no hard and fast rule regarding debt ratios. But when the DTI starts to creep above 50%, it could make it harder to qualify for mortgage loan. On the other hand, a lower ratio could make it easier to qualify for financing.
Multimillion-Dollar Home Loans Common in the Bay Area
In the relatively expensive San Francisco Bay Area real estate market, the biggest mortgage loans often exceed $1 million. In fact, we regularly generate loans that fall within the multimillion dollar range.
Some borrowers don’t even realize there are mortgage loans that big. That’s why it is important to speak to a knowledgeable mortgage professional about your financing needs. You might be surprised by how much you are able to borrow. Please contact us if you have questions about your financing ability.
Ready to Find out How Much You Can Borrow?
This article answers a common question among home buyers in the Bay Area: What’s the biggest mortgage loan I can get?
As you can see, there are many different variables at work here. The biggest home loan you can qualify for will largely be determined by your income, your existing debt, and your previous borrowing history.
Please contact our knowledgeable staff, if you would like to move forward in the process. Bridgepoint Funding is located in the San Francisco Bay Area but serves the entire state of California. We offer a broad range of mortgage products including both conforming and jumbo, along with FHA and VA.
We can review your current financial situation to determine the biggest mortgage amount you can borrow here in the Bay Area. We look forward to hearing from you!