Buying in Burlingame asks more of your down payment strategy than most markets. Prices are high, jumbo loans are common, and lenders look closely at reserves and documentation. You want a plan that keeps you competitive without draining your cash. In this guide, you’ll learn the most effective down payment paths used on the Peninsula, what local lenders expect, and how to choose the approach that fits your goals. Let’s dive in.
Why down payments differ in Burlingame
Burlingame sits in a high-cost pocket of San Mateo County. Many home prices exceed the conforming loan limits, which often pushes buyers into jumbo or portfolio financing. That shift changes down payment options, documentation, and rate pricing.
Before you shop, confirm whether your price range falls under conforming limits or into jumbo territory. You can review limits by county using the FHFA conforming loan limit lookup. Knowing this helps you focus on programs that match your target purchase price.
Four core strategies to consider
Each path can work in Burlingame. The right fit depends on your liquidity, income profile, and comfort with monthly payments.
Option 1: 20 percent down (no PMI)
- Mechanics: You bring 20 percent of the purchase price to closing. The remaining 80 percent is financed with a conventional or jumbo loan.
- Why buyers choose it: You avoid private mortgage insurance and often secure better pricing than lower-down options. You also start with a stronger equity cushion.
- Pros: No PMI, simpler single-loan structure, and usually a lower interest rate for well-qualified borrowers.
- Considerations: Requires substantial cash. In a high-cost market, the opportunity cost of parking extra capital in home equity can be meaningful.
Option 2: 10 percent down with a piggyback second
- Mechanics: Often structured as 80-10-10. Your first mortgage covers 80 percent, a second lien (home equity loan or HELOC) covers 10 percent, and you bring 10 percent down. Variants like 80-15-5 also exist.
- Why buyers choose it: Lowers cash needed at closing while keeping the first mortgage at 80 percent to avoid PMI.
- Pros: Less cash outlay than 20 percent down and no PMI. The first-lien rate can be lower when capped at 80 percent loan-to-value.
- Considerations: The second lien usually carries a higher rate. You manage two payments, and combined-loan-to-value and total debt must fit lender guidelines. Second liens can complicate future refinancing or a sale. For tax treatment of interest, consult a tax professional.
Option 3: Gift funds and family-assisted down payments
- Mechanics: Eligible family members gift funds to help with the down payment. Lenders require a gift letter and a paper trail that shows transfer and donor ability to give.
- Why buyers choose it: Helps first-time or asset-rich but cash-light buyers reach important thresholds like 20 percent.
- Pros: Preserves your liquidity and can accelerate your purchase timeline.
- Considerations: Donor documentation is required, and some programs limit how much of the down payment can be gifted. In many jumbo scenarios, you still need your own reserves. For potential gift-tax filing requirements, review IRS guidance on gift taxes and consult a tax advisor.
Option 4: Portfolio and private-bank jumbo solutions
- Mechanics: Portfolio lenders keep loans on their books and can offer customized underwriting. Private banks may qualify you based on assets or bank statements rather than traditional W-2 income alone.
- Why buyers choose it: Flexibility for self-employed buyers, founders with complex income, or high-net-worth clients who prefer to keep investment strategies intact.
- Pros: Tailored approval paths and, in some cases, the ability to qualify with significant liquid assets. These programs can sometimes allow higher loan-to-value ratios on jumbo purchases.
- Considerations: Expect larger reserve requirements and lender-specific rules. Rates and fees can vary more than standardized conforming options. Building a relationship with the bank can matter.
Other funding pathways to know
- HELOC on your current home: Borrow against existing equity to fund the new down payment. Lenders will count this debt in your ratios and review seasoning and documentation.
- Bridge loan: Short-term financing that lets you buy before you sell. Useful when your equity is tied up, but costs are higher and qualifications are strict.
- Retirement accounts: Some buyers use loans or withdrawals from 401(k) or IRA accounts. Tax implications and penalties vary, so consult your financial and tax advisors.
- Seller credits and assistance programs: Credits are possible but often limited on jumbo loans. State or county down payment assistance programs can exist, yet income and price caps may not align with Burlingame’s market. Confirm program rules before you count on them.
What local lenders review first
In Burlingame’s high-cost market, underwriting focuses on stability and liquidity.
Credit score and history
Higher scores can qualify you for better pricing. Jumbo and portfolio programs often favor mid-700s and above for the best terms. Waiting periods apply after major credit events.
Debt-to-income ratio
Lenders look at your monthly debts relative to gross income. Jumbo and portfolio programs commonly target maximum DTIs in the 40 to 45 percent range. Exceptions can exist for strong files.
Cash reserves and liquidity
Reserves are critical on the Peninsula. Many jumbo and portfolio loans require documented reserves measured in months of mortgage payments. Six to twelve months is common, and requirements can rise with larger loan amounts or complex income profiles.
Source of funds and documentation
Lenders track the path of funds into your down payment. You will provide bank and asset statements, and you may need letters explaining large deposits. For gifts, you’ll need a signed gift letter and proof of transfer.
Appraisal and LTV or CLTV
The appraisal must support the price. With piggybacks, lenders evaluate combined loan-to-value across both liens. In competitive markets, be prepared for appraisal gaps and discuss your plan if the appraisal comes in low.
Employment and income verification
W-2 buyers provide pay stubs, W-2s, and sometimes tax returns. Self-employed buyers may provide business returns or use bank-statement programs through portfolio lenders.
Pricing by LTV and loan amount
Lower down payments usually result in higher rates or PMI on conforming loans. For jumbo financing, pricing often steps up at higher LTV tiers and improves as you add more down payment.
How to choose your path
Start by clarifying your priorities: monthly payment comfort, liquidity after closing, and speed to close. Then match your profile to the financing that aligns with those priorities.
- If you want the simplest path and best rate, and you have the liquidity, 20 percent down is often straightforward.
- If you want to conserve cash and avoid PMI, consider a piggyback. Model the total monthly cost and the impact of a second lien.
- If you have strong assets but non-traditional income, explore portfolio lending or private-bank jumbo options. Discuss reserve requirements early.
- If family wants to help, line up gift documentation before you write offers so funds are seasoned and traceable.
Run scenarios that include principal and interest, PMI if applicable, and the payment on any second lien. The CFPB mortgage calculator is a neutral tool to compare monthly costs.
Next steps and a simple checklist
Getting organized early lets you compete with confidence in Burlingame.
Immediate steps
- Get prequalified with at least two lenders, including one that regularly funds jumbo or portfolio loans on the Peninsula.
- Confirm whether your target price points are conforming or jumbo using the FHFA conforming limit lookup.
- Ask about reserve requirements, acceptance of gift funds for reserves, piggyback availability, and appraisal gap policies.
Documentation checklist
- Recent bank and brokerage statements showing funds for down payment and reserves
- Gift letter and donor statements if using gift funds
- Pay stubs and W-2s, or business returns and 1099s if self-employed
- Documents for any asset sales, retirement account loans or withdrawals
- Explanations for any large or unusual deposits
Burlingame rewards preparation. When your financing story is clear, you can act quickly and negotiate from a position of strength.
Ready to tailor a down payment plan to your search in Burlingame or greater San Mateo County? Reach out to the Laugesen Team to talk strategy, timeline, and the next steps toward your ideal Peninsula home.
FAQs
Is 20 percent down always the best move in Burlingame?
- Often 20 percent yields lower rates and no PMI, but it may not be optimal if it strains your liquidity or investment plans. Balance rate benefits with your need for cash reserves.
Do piggyback loans still make sense for Peninsula buyers?
- They can. Piggybacks help avoid PMI with less cash down, yet they add a second payment and higher-rate debt. Compare the total monthly cost and future refinance options.
Can gift funds cover both my down payment and reserves?
- Gift funds can typically cover down payment and sometimes closing costs, but many jumbo programs require some reserves to be your own. Confirm this during preapproval.
How do jumbo loans change qualification requirements?
- Jumbo loans usually require higher credit scores, lower DTIs, and larger reserves. Portfolio lenders can offer flexibility for buyers with substantial assets or complex income.
Can I use a HELOC or bridge loan to buy before I sell?
- Yes, some buyers tap a HELOC or short-term bridge loan, but lenders include these debts in DTI and CLTV. Costs are higher and you need a clear repayment plan.
What if the appraisal comes in below the purchase price?
- You may need to bring extra cash, renegotiate, or restructure loans. Discuss appraisal gap strategies with your lender before you write offers.
