There are usually three types of mortgages: conventional, high balance and jumbo. The loan limits for these mortgages will be increased starting Jan 1, 2017. Here’s a breakdown of what it will look like in 2017:
Conventional – up to $424,100
High Balance – $424,100 – $612,950
Jumbo – above $612,950
In general, the conventional loan will have the lowest interest rate. When banks talk about interest rates, they are usually referring to the conventional loan rate. Any loan amount above the conventional loan limit introduces more risk to the bank. Due to this, they normally charge a higher interest rate and have stricter underwriting guidelines. High balance loans will normally have a higher interest rate than the conventional loan and jumbo loans will generally have a higher interest rate than the high balance loan. So ideally you would try to get a conventional loan, but with the high cost of living in San Diego, it is very difficult to do so without a large down-payment.
If you need any recommendations on a lender or have any questions at all about financing/loans, please feel free to contact me.