Thinking about buying a luxury home in Southern California? Before you book a showing for that $3M ocean-view villa in Santa Monica, you’ll want to get a pre-approval for a luxury mortgage. The process is similar to a standard loan, but when you’re dealing with a million-dollar home loan or higher, the requirements shift.
Here’s what it really takes to get pre-approval for a luxury mortgage, and why non-QM loans could be your best-kept secret to getting it done.
What Lenders Look For in a Luxury Home Loan Applicant
We’ve been experts in the luxury home lending industry for years, so we know how to assist our clients in finding the right financing solution. It starts with knowing what you need to qualify for a pre-approval, and that differs depending on the type of loan you have.
In general, lenders evaluating loans in the $1M+ range are assessing more than just your credit score. You’ll need to meet certain guidelines in several areas:
- Income Verification: You’ll typically need to show 2 years of consistent income using tax returns, W-2s, or 1099s. For self-employed borrowers, expect to provide full documentation, or look at bank statement loans if tax returns don’t reflect your true earning power.
- Assets and Reserves: Underwriters want to see ample liquid assets. For a typical loan, you’ll need to have 6–12 months of mortgage payments in reserves, especially for jumbo or non-traditional borrowers.
- Debt-to-Income (DTI) Ratio: While most lenders cap DTI at 43%, high-net-worth individuals may qualify above that with compensating factors like strong assets or significant down payments. We can talk with you about details based on your unique numbers.
- Credit Score: A score of 700+ is often the baseline for jumbo loans, but borrowers with excellent assets or alternative income can sometimes qualify with less.
What Makes Jumbo and Luxury Loans Different?
Any loan amount above the conforming loan limit (currently $766,550 in most SoCal counties) is considered a jumbo loan. These loans aren’t backed by Fannie Mae or Freddie Mac, which means they come with stricter underwriting rules, you may need a higher down payment than you would for a less expensive property, and there’s more scrutiny on income, liquidity, and overall financial health
If you’re buying in places like Newport Beach, Beverly Hills, or La Jolla, jumbo loans are the norm. But what if your finances don’t fit the traditional mold? The good news is, our team of mortgage experts has been trained by Jackie Barikhan, an expert in finding financing solutions that align with the unique needs of borrowers, specifically non-QM loans.
Non-QM Loans: A Flexible Solution for Luxury Buyers
Many luxury buyers are asset-rich, business owners, or have fluctuating income streams, all of which won’t always work for conventional lending. That’s where non-QM (non-qualified mortgage) loans come in.
These loan types offer greater flexibility in how income and assets are evaluated. Non-QM Loans might be:
- Bank Statement Loans – Qualify using 12–24 months of business or personal bank deposits.
- Asset Depletion Loans – Use your investment accounts as a source of “income” for qualification purposes.
- Interest-Only Jumbo Loans – Keep payments lower for the first 5–10 years while maximizing cash flow.
Non-QM loans aren’t “subprime” — they’re fully underwritten and often used by high-income clients with complex financial profiles. They’re a powerful tool for navigating luxury mortgage pre-approval when standard guidelines fall short.
How to Get a Pre-Approval for a Luxury Home Loan
If you’re serious about buying a million-dollar home, a pre-approval does two things:
- Proves you’re financially ready to agents and sellers in competitive markets, allowing you to make efficient offers that stand out
- Gives you clarity on your purchase price, monthly payment, and options for structuring your loan
Here’s what you’ll typically need to start the pre-approval process:
- Full income documentation or bank statements (if using a non-QM loan)
- Asset statements (checking, savings, investments, retirement)
- Credit report and score check
- Valid ID and general financial overview
Once your file is reviewed, we will issue a formal pre-approval letter that outlines how much you’re qualified to borrow and under what terms.
Let’s Talk Luxury Mortgage Strategy
The SoCal luxury market moves fast, and the right financing can give you a serious advantage. Whether you’re a high-earning W-2 buyer, a self-employed entrepreneur, or a real estate investor with complex finances, there’s a smart way to structure your loan and we can help you find it.
Ready to prequalify for a luxury mortgage? Let’s talk about your goals and design a mortgage strategy that fits your lifestyle — and your next dream home. Contact us today to get started.
