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Chapter 4 · Finance

Getting a mortgage

12 min read Facts verified Oct 6, 2026
A hillside packed with Victorian and Edwardian homes above a line of cypress treesDaniel Abadia / Unsplash

This chapter is for anyone getting ready to borrow for a San Francisco home. You'll learn how lenders decide what you can borrow, which loans make sense here, and who's lending at $2M–$8M now that First Republic is gone. Most SF purchases need a jumbo loan (one bigger than the government-backed limit), and each lender writes its own jumbo rules. Those rules can matter more than the rate.

The short version

  • The 2026 SF conforming (high-balance) limit is $1,249,125 for one unit. Above that you're in jumbo territory, which covers almost any house purchase in SF.
  • Early October 2026 rates: 30-year jumbo ~7.5–7.7%; 10/6 jumbo ARM (adjustable-rate mortgage) ~6.9%; Freddie Mac 30-year average 7.28% (Oct 1).
  • Typical jumbo bar: 740+ FICO credit score for best pricing, 10–30% down (more above $3M), DTI around 43%, and 6–24 months of reserves (savings left over after closing).
  • If you're paid partly in stock: public RSUs count as income after 12 months of vesting at your current employer, valued at the 200-day moving average. Private equity counts as zero. Tender cash counts as assets.
  • Private banks trade relationship pricing (often 0.25–0.5% off) and interest-only or pledged-asset structures for moving your investment accounts to them.
  • Shop 3–5 lenders, including a private bank, a credit union, and a broker. Ask each one exactly how they'll count your income before you ask about rate. Our figures are a snapshot; only a lender's written quote and approval count.

Conforming vs. jumbo

A conforming loan follows the rules of Fannie Mae and Freddie Mac, the government-sponsored companies that buy most US mortgages. Their regulator, the FHFA, caps the loan size each year. San Francisco County's 2026 limits sit at the national high-cost ceiling:

1-unit limit

$1,249,125

SF County, 2026

2-unit

$1,599,375

Duplexes

3-unit

$1,933,200

4-unit

$2,402,625

A loan at or below the limit is "high-balance conforming." It follows Fannie Mae/Freddie Mac rules and allows a debt-to-income ratio (DTI, the share of your monthly income that goes to debt payments) up to ~50% through automated underwriting. You can put less than 20% down if you pay PMI (private mortgage insurance, a monthly fee that protects the lender). In practice, a purchase of up to about $1.56M with 20% down stays conforming. For 2–4 unit buildings, the higher limits stretch further.

Above the limit, the loan is a jumbo, held by the bank or sold to private investors. Jumbos aren't worse loans. Right now the gap between jumbo and conforming rates is only about 0.1–0.2 points, and jumbos have sometimes priced below conforming. They are less standardized, though.

FactorHigh-balance conformingTypical jumbo (2026)
Max loan (SF, 1 unit)$1,249,125Lender-set; $3M–$20M+ at private banks
Min FICO~620 (pricing improves to 780)700 minimum; 740–760+ for best pricing
Down payment3–5% with PMI10–20% up to ~$2–3M; 20–30%+ above $3M; 30–40% at $5M+ at many lenders
DTIUp to ~45–50%~43% (some to 45% with strong compensating factors)
ReservesOften 0–6 months6–12 months PITI, 12–24+ for loans over ~$2–3M
AppraisalOneOften two above ~$2M
RSU incomeFannie/Freddie 200-day MA ruleVaries by lender

PITI is your full monthly payment: principal, interest, property taxes and insurance. "Six months PITI" means six of those payments left in your accounts after closing.

Rates and loan types (as of early October 2026)

ProductRateSource / date
30-yr fixed, Freddie Mac PMMS7.28%Oct 1, 2026 (a year ago: 6.34%)
30-yr conforming (daily)~7.54–7.61%MRC / MND, Oct 5–6, 2026
30-yr jumbo (daily)~7.54–7.70%Bankrate / MRC / MND, Oct 5–6, 2026
10/6 SOFR ARM, jumbo~6.88%MRC, late Sept 2026
7/6 SOFR ARM, jumbo~7.00%MRC, late Sept 2026
5/6 SOFR ARM, jumbo~6.58%MRC, late Sept 2026

These are national averages, and there's no published SF-only rate. SF jumbo borrowers may see different quotes, mostly because of loan size, lender and relationship pricing rather than location. With a 780 FICO, 25%+ down and relationship pricing, you can be quoted quite a bit lower. Rates move fast, too: jumbos were in the low-to-mid 6s in early 2026. Oddly, the 10/6 ARM currently prices below the 7/6, so shop the exact term you want.

Fixed rate or adjustable rate

An ARM holds one rate for a set number of years (10 years on a 10/6), then adjusts every 6 months based on an index called SOFR. On a $2.4M loan, the 10/6 ARM at 6.88% runs $15,774/mo in principal and interest (P&I), versus $17,012 for the 30-year fixed at 7.64%. That saves ~$1,240/month, or about $149k over the 10-year fixed period.

What happens at year 10? The balance would be about $2.05M. The rate then resets every 6 months to SOFR plus a margin (commonly ~2.75%), within limits called caps. A common cap structure is 5/1/5: up to +5 points at the first reset, +1 per adjustment after that, and +5 over the life of the loan.

Year-11 scenarioRateP&I on remaining ~$2.05M (20 yrs)
SOFR stays ~3.88% (+2.75% margin)6.63%~$15,470
Rate +1 point vs. today's fixed7.88%~$17,020
Worst case (5-point cap hit)11.88%~$22,440

ARMs suit buyers who expect to move within 7–10 years (a lot of first-time SF buyers) and buyers who plan to pay the loan down fast with bonuses, stock or other windfalls. They don't suit anyone whose plan only works if rates fall.

Interest-only loans

With an interest-only (IO) loan, you pay only interest for the first ten years. Ten-year IO jumbos (often on a 10/1 or 10/6 ARM) are common at private banks and some credit unions. SF Federal Credit Union, for example, advertises a 10-year IO ARM up to $3M. On $2.4M at 7.0%, the IO payment is $14,000/mo versus ~$15,970 for a regular paying-down loan.

The catch: most lenders qualify you on the full paying-down payment anyway. IO eases your monthly cash flow but doesn't raise your budget. Expect 25–30%+ down.

Points

A point is 1% of the loan, paid upfront to lower your rate. How much it lowers the rate varies by lender and by day; ~0.25% per point is a common ballpark. On a $2.4M loan, a $24,000 point that cuts the rate from 7.64% to 7.39% saves about $411/month, so it takes about 58 months to earn back. If you expect to refinance or sell inside ~5 years, points usually aren't worth it. Ask every lender for a quote with and without points.

How lenders count your income

Salary and bonus

Base salary is simple: paystubs, W-2s and a verification of employment. Bonuses usually need a 2-year history and get averaged, using the lower number if they're shrinking. Sign-on cash bonuses don't count. A new job in the same line of work is usually fine with an offer letter, though jumbo lenders often want 30 days of paystubs first.

If part of your pay is public-company stock

If you get RSUs (restricted stock units, shares that vest over time), lenders can count them under Fannie Mae B3-3.3-07 (updated March 4, 2026), with Freddie Mac now using the same 200-day average:

  • RSUs must have vested and been distributed to you without restrictions.
  • Time-based RSUs need at least 12 months of history with your current employer. Recurring refresh grants need no further proof that they'll continue; a one-time grant needs 3 years of documented continuance.
  • Sign-on RSU grants are never eligible, whatever their vesting schedule.
  • The math: 200-day moving average (MA) share price × shares vested and distributed in the last 24 months (pre-tax) ÷ 24, or ÷ actual months if you have 12–24 months of history.

Here's an example. Say 2,400 shares vested over 24 months and the 200-day MA is $180.

ComponentMonthly
Base salary ($250k)$20,833
RSU income: $180 × 2,400 ÷ 24$18,000
Qualifying income$38,833
Max total debt at 43% DTI~$16,700

That ~$16,700/month supports roughly a $2.4–2.5M purchase at 20% down at today's rates. Without the RSUs, the same buyer qualifies for about half that.

Two things to watch:

  • A falling stock drags the 200-day MA down with a lag, so your qualifying income can drop mid-escrow.
  • Jumbo lenders differ a lot. Some use the Fannie Mae formula, some average 2 years of W-2s, and some take upcoming vesting × today's price minus a cushion. Private banks may look at your total wealth instead.

Borrowing against investments for the down payment

Most buyers use savings for the down payment, sometimes with a family gift. With a large investment account, another route is a pledged-asset line, a loan secured by your stocks or funds. Fannie Mae B3-6-05 lets lenders leave that line's payment out of your DTI, as long as it's documented as secured by financial assets. The borrowed amount is subtracted from those assets when counting reserves. Jumbo lenders may not follow this rule, so ask directly.

Buying on a visa

  • Conventional (Fannie/Freddie): non-permanent residents who are lawfully present (valid SSN and unexpired visa or work permit, called an EAD) can borrow on the same terms as citizens.
  • FHA: non-permanent residents have been ineligible for these government-insured loans since May 25, 2025. At SF prices, that rarely matters.
  • Jumbo: depends on the lender. Common asks are 2+ years of US credit, time left on your visa, evidence of likely renewal, and sometimes 20–30% down. Private banks are often flexible for high-asset clients.
  • H-1B $100k fee: the September 2025 proclamation was renewed in September 2026, but federal courts struck the fee down in June 2026 (Massachusetts) and again on Sept 30, 2026 (Oakland), with the second ruling covering the renewal too. Appeals are likely, and a separate DHS proposed rule is pending. In-country extensions and transfers were exempt anyway. Ask your lender whether they look harder at job changes for visa holders.

Who lends at this level in SF

First Republic was SF's go-to jumbo and interest-only lender until it was seized in May 2023. Its loans and many of its bankers now sit inside JPMorgan. Who's lending today:

CategoryExamplesWhy you'd use them
Private / wirehouse banksJPMorgan Private Bank & Chase Private Client, Morgan Stanley, Citi Private Bank, Goldman Sachs PWM, UBS, BofA/Merrill, Wells Fargo Private BankRelationship pricing, IO, pledged-asset mortgages, flexibility on RSU-heavy or wealth-based underwriting, $3M–$20M+ loans
Brokerage banksSchwab Bank, E*Trade/Morgan StanleyRate discounts tied to assets; PAL (pledged asset line) integration
Regional / communityBank of Marin, Bank of San Francisco, Sterling Bank & Trust, Comerica, Fremont BankPortfolio loans, TIC loans, local judgment
Credit unionsSF Federal CU, Patelco, Redwood CU, Meriwest, First Tech FCU, ProvidentCompetitive jumbo ARMs/IO, lower fees, TIC loans
Mortgage brokersIndependent jumbo brokersShop dozens of wholesale investors; useful for unusual income situations

Relationship pricing usually means moving $1–5M+ of assets to the bank for a rate discount of roughly 0.25–0.5% (secondary-source figures; quotes are individual). On a $4.2M loan, 0.5% is about $1,430/month. Weigh that against the bank's advisory fees and how hard it is to move your money out later.

TICs (tenancy-in-common, where co-owners share one building) need specialized fractional loans, typically priced ~0.5–1.25% above comparable condo loans with 15–25%+ down. See SF property types decoded.

Why SF offers need a real approval

SF offers are usually non-contingent: no loan, appraisal, or inspection contingency, meaning you can't back out if one of those falls through (see Winning an offer in SF). That changes what "pre-approved" needs to mean.

  1. Pre-qual (worthless in SF): a conversation and a soft credit pull.
  2. Pre-approval: a credit pull plus a review of your documents. This is the minimum before you start touring.
  3. Fully underwritten approval (the SF standard): an underwriter has reviewed your income, stock math if any, assets and reserves, and only the property is left. This is what makes waiving the loan contingency survivable.
  4. Property-specific steps after acceptance: appraisal (two above ~$2M at many lenders), title, insurance binder, rate lock. Get homeowners and earthquake quotes during this window (Insurance & earthquakes).
  5. Lock and close: typical rate locks are 30–60 days. Ask about float-down options, which let you take a lower rate if rates drop, in a jumpy market like this one.

Questions to ask every lender

  • How exactly do you calculate RSU income: 200-day MA, W-2 average, or forward vesting? Show me my number.
  • Do refresh grants, performance RSUs, and my bonus count? What history do you need?
  • How do you treat a securities-backed line used for the down payment: is it in or out of DTI, and how do you count reserves?
  • Do you count vested stock and retirement accounts toward reserves, and at what percentage?
  • What reserves do you require at my loan size? Do you require two appraisals?
  • For ARMs: what are the index, margin, and caps? Is there an IO option, and do you qualify on the IO or amortizing payment?
  • What's the price of one point, and what rate does it buy?
  • What relationship pricing do you offer, and what asset level unlocks it?
  • Can you issue a fully underwritten approval before I'm in contract? How fast can you close: 21 days? 14?
  • Do you offer float-down or extended locks?
Sources & verification›