Are you shopping for a Gilroy home and wondering if you should use a conforming high-balance loan or go jumbo? You are not alone. The choice can change your rate options, down payment, reserves, and even how competitive your offer feels. In this quick guide, you will learn the 2025 loan limits that apply in Santa Clara County, the key differences between these loan types, and how to decide which path fits your purchase. Let’s dive in.
Conforming high-balance vs. jumbo: what they mean
Conforming high-balance loans are conventional mortgages that meet Fannie Mae or Freddie Mac rules up to the county’s high-cost limit. In 2025, the national baseline limit is $806,500, and high-cost counties can go up to a higher ceiling. The line that matters locally is the Santa Clara County limit.
Jumbo loans are simply mortgages that exceed the conforming high-balance cap. They are not eligible for sale to Fannie Mae or Freddie Mac, so private investors or the lender hold or securitize them, which changes underwriting and pricing.
2025 limits that apply in Gilroy
- The FHFA set the 2025 national baseline conforming limit at $806,500 for a 1-unit home. You can confirm the national and high-cost framework in the FHFA announcement via Fannie Mae’s site: 2025 conforming loan limit values.
- Santa Clara County is at the high-cost ceiling: the conforming high-balance cap is $1,209,750 for a 1‑unit property in 2025. See the county-specific number here: Santa Clara County conforming limits.
- The limit applies to the original loan amount at closing. If your loan amount is at or below $1,209,750, you are in high-balance conforming territory. Above that, you are looking at a jumbo product.
How these loan types differ
Who buys or guarantees the loan
- High-balance conforming loans are delivered to Fannie Mae or Freddie Mac, which brings standardized guidelines and broad market liquidity. Learn more in the FHFA 2025 limits overview.
- Jumbo loans are not GSE-eligible and are priced or held by private investors. That changes appetite, overlays, and documentation, as outlined in this explainer on jumbo vs. conventional mortgages.
Underwriting and documentation
- Credit scores: jumbos often expect stronger credit for best pricing, while conforming allows lower minimums within program rules.
- Debt-to-income and reserves: jumbos frequently require lower DTI and more months of cash reserves. Conforming high-balance follows standard GSE rules, though specifics can vary by profile.
- Down payment: conforming programs can allow higher loan-to-value ratios. Jumbos commonly seek larger down payments, although products vary. See common differences in jumbo vs. conventional guidelines.
- Appraisal and docs: some jumbo investors ask for enhanced verifications or additional appraisal review, especially when comps are thin. Conforming loans follow automated GSE underwriting and standard appraisal rules.
Rates and pricing
- Jumbo does not always mean higher rates. In some markets, jumbo rates can be similar to, or even below, conforming rates. Spreads shift with investor demand and borrower profile, so it pays to compare multiple lenders. See historical context in this overview of how jumbo loans differ.
Mortgage insurance and program fees
- Conventional high-balance: if you put less than 20% down, PMI usually applies and can be canceled once equity thresholds are met. Learn the basics of mortgage insurance.
- FHA: Santa Clara County aligns with the high-cost ceiling up to $1,209,750 and uses upfront and annual MIP. See FHA program info here: FHA single-family guidance.
- VA: no monthly mortgage insurance, but a funding fee applies unless exempt. See details on the VA funding fee. The statutory county cap was removed in 2020 for eligible borrowers, though lenders may still set maximums. Read more about limits and lender practices here: VA loan amounts in California.
Gilroy price context and what it means
Many Gilroy sales trade near the one to 1.2 million dollar range, with higher-end properties above that. Because the Santa Clara County conforming cap is $1,209,750, a wide slice of Gilroy purchases can qualify for high-balance conforming loans if the loan amount stays at or below that cap. Higher price points or lower down payments can push the loan amount above the limit, which is when jumbo options come into play.
Local appraisals can also affect loan size and loan-to-value. In shifting markets, lenders and investors may be conservative on valuations, which can change your final LTV or the product you qualify for. The Bay Area’s market rhythm and comps can move quickly, as covered by the San Francisco Chronicle’s housing coverage.
Simple Gilroy scenarios
- Purchase at $1,150,000 with 20% down: your loan is $920,000, which fits high-balance conforming.
- Purchase at $1,300,000 with 10% down: your loan is $1,170,000, which still fits high-balance conforming.
- Purchase at $1,300,000 with 5% down: your loan is $1,235,000, which exceeds $1,209,750 and requires jumbo.
- Any situation where your needed loan amount is over $1,209,750: plan for jumbo underwriting and pricing.
How to choose your path
- Confirm your budget and target down payment. Your loan amount drives the decision, not just the home price.
- Ask a lender for two written preapproval scenarios near the cap: one high-balance conforming at or below $1,209,750, and one jumbo above it. Compare rate, fees, reserves, and MI.
- Weigh PMI vs. a higher down payment. PMI can be temporary and cancellable on conventional loans, which may keep more cash in your pocket.
- Review documentation expectations. If your profile is complex, consider whether the tighter jumbo verification could slow your timeline.
- Revisit after the appraisal. A value shift can change your loan amount or LTV, which may shift the best-fit product.
Government loan options at higher amounts
Action steps before you shop in Gilroy
- Get preapproved with two paths: high-balance conforming and jumbo. Compare rates, fees, PMI, reserves, and docs side by side.
- Confirm the current Santa Clara County limit of $1,209,750 and plan your down payment to keep the loan at or below the cap if you want a conforming option. See the county figure here: Santa Clara County conforming limits.
- If using FHA or VA, verify the county ceiling, funding fee or MIP, and your lender’s internal maximums.
- Ask about appraisal reviews and any extra requirements for jumbos. Get expectations in writing so you can plan your timeline and assets.
If you want a calm, local game plan for your Gilroy purchase, reach out to Louis Ponce. You will get clear guidance, hands-on coordination, and neighborhood insight to help you choose the right financing path and write a stronger offer.
FAQs
What is the 2025 conforming high-balance limit for Santa Clara County?
- The 2025 1‑unit high-balance conforming cap is $1,209,750, which applies to Gilroy purchases because Gilroy is in Santa Clara County.
How do I avoid a jumbo loan on a Gilroy purchase?
- Keep your loan amount at or below $1,209,750 by adjusting your down payment, seller credits, or price target so the original loan at closing stays within the conforming cap.
Are jumbo rates always higher than conforming rates?
- Not always; rate spreads change with markets and investor demand, so it is smart to compare multiple lenders for both high-balance conforming and jumbo options.
Do high-balance conforming loans require PMI?
- If your down payment is under 20 percent, conventional high-balance usually includes PMI that can be canceled later once you meet equity rules.
How do FHA and VA loans work at higher price points in Gilroy?
- FHA can insure up to the local ceiling in Santa Clara County, and VA has no county cap for eligible borrowers, but each has its own fees and lender maximums that affect the total cost.
Can an appraisal change whether I need jumbo financing?
- Yes; if the appraisal comes in lower than expected, your loan-to-value may rise and could affect product eligibility or pricing, so plan for a buffer and confirm with your lender after valuation.
