learnmortgage labpoints, buydowns, arms, limits
The Mortgage Lab
The financing math behind a Silicon Valley offer: whether points pay off, what a 2-1 buydown really costs, how bad an ARM can get, and where the jumbo line sits in 2026.
PointsBuydownsFixed vs ARMConforming or jumboPrograms
- 30-year fixed, U.S. average7.40%Freddie Mac, Oct 15, 2026
- 15-year fixed6.71%same week
- 2026 conforming limit here$1,249,125one unit, all three counties
- max debt-to-income50%Fannie Mae automated underwriting
points break-even
Do discount points pay off?
One point costs 1% of the loan. Enter the rates your lender quotes with and without points to see how long the savings take to cover the cost.
points math
temporary buydowns
What a buydown really costs
A seller credit can buy your rate down for the first years of the loan. See the payments year by year, the total cost and how it fits the seller-credit limit.
buydown math
fixed vs arm
Fixed or adjustable: the worst case
An ARM starts lower, then adjusts within its caps. Compare the savings up front with the interest you’d pay if the rate rose as fast as the caps allow.
fixed vs arm
conforming or jumbo
Conforming or jumbo?
In 2026, Santa Clara, San Mateo and San Francisco counties sit at the national ceiling for conforming loans. See where your loan lands and the down payment that keeps it conforming.
your loan
the rules
The rules behind the numbers
From FHFA, Fannie Mae, the CFPB, the IRS and Compass, checked October 16, 2026.
loan limitsFHFA, 2026
$1,249,125 for one unit
All three of our counties are at the high-cost ceiling. The national baseline is $832,750.
- 1 unit$1,249,125
- 2 units$1,599,375
- 3 units$1,933,200
- 4 units$2,402,625
compass perkRocket Mortgage
Rocket Preferred Pricing for Compass clients
On conforming purchase loans: a 1% lower rate for the first year, or a credit of 0.75% of the loan up to $6,000. Jumbo and non-QM loans get a 0.25% credit with no cap.
- Retail purchase loans only; can’t be combined with other discounts
- Rocket Mortgage, LLC (NMLS #3030) is the lender and can change or end the offer
- You’re free to use any lender
buydownsFannie Mae
You qualify at the full rate
Temporary buydowns can last up to 3 years, start up to 3 points below the note rate and rise by no more than 1 point a year.
- Seller and builder credits are capped by loan-to-value: 3% above 90%, 6% from 75.01% to 90%, 9% at 75% or less
- Investment properties: 2%
underwritingFannie Mae and CFPB
DTI, PMI and points
Automated underwriting allows debt-to-income up to 50%; manual underwriting 36%, or up to 45% with strong credit and reserves.
- Private mortgage insurance can be cancelled on request at 80% of the original value and ends automatically at 78%
- Points on a home purchase can be deductible in the year paid if IRS conditions are met; refinance points are deducted over the loan
down payment help
Down payment programs, checked today
- CalHFA Dream For AllA shared-appreciation loan of up to 20% of the price, capped at $150,000. The 2026 application window closed March 16, 2026; watch for the next round.
- CalHFA MyHomeUp to 3.5% of the price (FHA) or 3% (conventional), paired with a CalHFA first mortgage; ask the lender whether funds are available.
- Santa Clara County: Empower Homebuyers SCCFully subscribed and closed; the program ended June 30, 2026.
- San Francisco: DALPDeferred loans of up to $500,000 for first-time buyers; the 2025 round closed June 2, 2025, and a 2026 round isn’t posted yet.
- San Mateo CountyThe county lists its current first-time homebuyer programs and partners.
- VA loansBorrowers with full VA entitlement have no VA loan limit.
Programs open and close often, and most have income and price limits. Ask a lender who works with these programs before you count on one.
sources
Where the numbers come from
Checked October 16, 2026.
- FHFA: 2026 conforming loan limitsBaseline and ceiling.www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026
- FHFA: 2026 county loan limitsSanta Clara, San Mateo and San Francisco.www.fhfa.gov/document/data/fullcountyloanlimitlist2026_hera-based_final_flat.xlsx
- Freddie Mac: Primary Mortgage Market SurveyWeekly average rates, October 15, 2026.www.freddiemac.com/pmms
- CFPB: discount points and lender creditsHow points work.www.consumerfinance.gov/ask-cfpb/what-are-discount-points-and-lender-credits-and-how-do-they-work-en-136/
- IRS Topic 504: home mortgage pointsWhen points are deductible.www.irs.gov/taxtopics/tc504
- Fannie Mae Selling Guide B2-1.4-04Temporary buydowns.selling-guide.fanniemae.com/sel/b2-1.4-04/temporary-interest-rate-buydowns
- Fannie Mae Selling Guide B3-4.1-02Seller credit limits.selling-guide.fanniemae.com/sel/b3-4.1-02/interested-party-contributions-ipcs
- CFPB: ARM rate capsCommon cap structures.www.consumerfinance.gov/ask-cfpb/what-are-rate-caps-with-an-adjustable-rate-mortgage-arm-and-how-do-they-work-en-1951/
- Fannie Mae Selling Guide B2-1.4-02SOFR index.selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms
- Fannie Mae Selling Guide B3-6-02Debt-to-income ratios.selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios
- CFPB: removing PMI80% and 78% rules.www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/
- Compass: Rocket Preferred PricingOffer terms and disclaimers.www.compass.com/rocketmortgage/
questions
Questions we hear
Should I pay points or take a lender credit?
It depends on how long you’ll keep the loan. Points cost money now to save every month; a lender credit lowers your cash at closing in exchange for a higher rate. Run the break-even with real quotes.
Is a 2-1 buydown better than a lower price?
A buydown lowers the first two years of payments; a price cut lowers the loan for its whole life. The calculator shows the buydown’s cost so you can compare it with the same dollars off the price.
Do I qualify at the bought-down rate?
No. Fannie Mae and Freddie Mac require you to qualify at the full note rate.
Is my loan a jumbo?
In 2026, a one-unit loan above $1,249,125 is a jumbo in Santa Clara, San Mateo and San Francisco counties.
Can I use Rocket Preferred Pricing with any agent?
It’s offered to Compass clients on eligible loans from Rocket Mortgage. You’re free to choose any lender.
more to learn
Keep going
- What you can affordFrom income, debts and cash to a price.
- Tech Equity HomebuyingTurn RSUs and options into a down payment.
- Offer LabHow far over or under asking homes are selling.
- Budget LabWhat your budget bought in up to three cities.
- Buyer PlaybookFrom pre-approval to keys.
- Compass + Boyenga ToolkitEvery Compass program in one place.
General information, not financial, tax or legal advice, and not a loan offer. Calculations show principal and interest only and use the rates you enter. Rates, limits and programs were checked October 16, 2026 and change often.
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