Where conforming ends in Los Angeles County

Three tiers of loan amount

Fannie Mae and Freddie Mac buy loans up to a limit set each year by the Federal Housing Finance Agency. There is a national baseline, and high-cost counties get a higher ceiling. Los Angeles and Orange are high-cost counties, so there are three tiers here: conforming up to the baseline, high-balance from the baseline to the county ceiling, and jumbo above that.

The figures change every January. Rather than quote a number that will be stale in a few months, this guide explains the mechanics; Troy quotes the current limits on the first call.

What changes above the line

Conforming and high-balance loans follow agency guidelines and are sold into a deep market, which keeps pricing sharp. Above the county ceiling the loan is jumbo: an investor underwrites and prices it under its own rules. Those rules often ask for more down payment, more reserves after closing and a closer reading of income, especially bonus, commission, equity compensation and self-employment.

• Larger down payment and more reserves, though programs vary widely
• Closer scrutiny of income sources and their stability
• Possibly two appraisals or a field review on higher-value homes
• Pricing set by the investor, which at times competes with or beats agency pricing

Keeping a loan under the line

Sometimes the better structure is a first mortgage sized to the high-balance limit paired with a second lien for the rest. The first mortgage gets agency pricing; the second carries the rest at its own rate. Whether the combination beats a single jumbo loan depends on the numbers that week, and Troy prices both.

Choosing the investor

Jumbo investors differ far more than agency lenders do. One reads restricted stock units as income; another ignores them. One is comfortable with a two-year-old business; another wants five. Placing a jumbo file well means knowing those differences, which is what two decades of placing them in Long Beach, the beach cities and Orange County are for.