In the past, you could buy a decent home in San Jose with just a conventional loan, but things have changed significantly. According to Redfin, the median sale price in San Jose is $1,469,200, and Zillow reports the average home value at $1,413,804. At this level, there are several factors to consider before choosing a loan program.

The first is the loan limit. Santa Clara County, where San Jose is located, has one of the highest limits among FHFA high-cost areas, with a core loan limit of $1,249,125 for 2026 (FHFA). Since the median sale price is already close to this limit, how much you prepare for a down payment will determine whether you end up with a conventional high-balance loan or need to switch to a jumbo loan.

The second factor is credit score and down payment requirements. Jumbo loans typically expect a credit score of 700 or higher and a down payment of 10 to 20%. Conventional loans can be applied for with a score of 620, but rates improve significantly once you exceed a score of 680. When consulting with various lenders, you will find that even with the same score, the rates offered can vary widely, and in areas like this where the loan amounts are substantial, those differences can lead to significant variations in monthly payments.

The third factor is whether mortgage insurance is required. If the down payment is less than 20%, PMI will be added, but it can be canceled once your equity exceeds 20%. In high-cost areas like San Jose, meeting the 20% down payment can be a burden, so many choose to start with PMI and build equity over time.

FHA loans are less commonly used in San Jose. While the 3.5% down payment is an advantage, the burden of mortgage insurance premiums that increase with the loan amount often outweighs this benefit. However, due to the high income levels in Silicon Valley, many households may find it easier to meet the requirements for jumbo loans.

Looking at neighborhoods with a high concentration of Korean families, areas with higher school district ratings often have prices that exceed the median. While resources like GreatSchools or Niche can be helpful, school district boundaries change frequently, so it's advisable to verify the assigned school for a specific address before purchasing. Families moving from other states should also note that California's property tax assessment methods differ from those in their previous residences.

The fourth factor to check is whether the purchase is for investment purposes. While there is steady rental demand in San Jose, the high purchase prices often result in lower rental yields compared to other areas. FHA and VA loans cannot be used for investment properties, and when purchasing for investment with a conventional loan, the down payment typically increases to between 15% and 25%.

For families preparing to settle after moving from Korea, the short U.S. credit history can be a hurdle. It's particularly important in this high-cost area to find lenders that accept alternative documentation, such as rental or utility payment histories, and to compare conditions across multiple lenders.

The fifth factor to consider is closing costs. In San Jose, where loan amounts are large, additional costs such as appraisal fees, title insurance, and loan origination fees can add up significantly. Since different lenders calculate these costs differently, it's crucial to compare not only interest rates but also closing costs, as this is an aspect that should not be overlooked.

The sixth factor is the competitiveness of your offer. Due to the nature of Silicon Valley, popular listings often attract multiple offers, so it's beneficial to choose a lender that can provide pre-approval and quickly submit proof of funds, which can be advantageous during the actual contract phase. Given that the number of available listings has decreased compared to the past, this preparation has become even more important.

The prices and loan limits discussed in this article are based on data from a specific point in time, and actual conditions may vary depending on the lender and individual circumstances. This is not investment or legal advice, and consulting with a professional before making any agreements is recommended.