Mortgage in California
California is home to some of the most important economic hubs in the United States. The state would rank fifth in the world in terms of GDP if it were a sovereign nation. This single state represents 14.6% of the entire US economy. Given that economic strength, many people move to the Golden State for its abundance of prosperous careers. Our California mortgage calculator helps you determine what you can afford in a notoriously expensive state.
The California Dream is something that many people have for a good reason. If you're looking to move, here's what you need to know about mortgages in the Golden State.
Mortgage Options in California
California is one of the rare states with more than three mortgage options. Let's break them down.
- California conventional mortgage: Most borrowers in California receive a traditional loan. However, high housing costs can make conventional mortgages tricky depending on where you want to live. The maximum conforming loan (which has less stringent requirements) is approximately $800,000. If you're moving to the Bay Area, for example, that won't go very far. With a conforming loan, you can get a mortgage with as little as 5% down, a 620 credit score, and a debt-to-income ratio under 43%. If you need a jumbo loan, expect to need multiple months of mortgage payments in reserve plus 20% down and a much higher credit score.
- California FHA mortgage: While you can receive FHA loans in California, the property price must be below $822,735, meaning that some of the hottest markets in the Bay Area and Los Angeles are ineligible. However, FHA loans are perfect for many of the smaller suburbs and cities around these areas. You can get an FHA loan for as little as 3.5% down (580+ credit score) or 10% down (500+ credit score).
- California VA mortgage: VA loans are fantastic for California buyers in large part because they do not require a down payment. However, you must have a stellar credit score to get a jumbo VA mortgage with 0% down. If your score is around 640, for example, you might need 10% down. VA loans do not require any private mortgage insurance.
- CalHFA mortgage: Unique to California is the CalHFA mortgage, a conventional, FHA, or VA loan backed by the California Housing Finance Agency . It gives you the option to add down payment and closing cost assistance into your mortgage. There are some income limitations to apply.
Once you're familiar with the different mortgage types available, you can start plugging numbers into our California mortgage calculator.
First-Time Home Buyer Programs in California
First-time homebuyers have two assistance programs available to them (in addition to the CalHFA mortgage above).
This program provides a junior loan of up to 3.5% of the purchase or appraised price, to a maximum of $10,000.
Eligibility Criteria: You must occupy the residence as your primary home. You must meet some income limits. Finally, you must complete a homebuyer education counseling class.
California also encourages energy efficiency whenever possible. This program combines an energy-efficient mortgage (EEM) with a grant that allows for energy-efficient improvements above the FHA maximum. The grant is for up to 4% of the mortgage amount.
Eligibility Criteria: Borrowers must be US citizens, nationals, or permanent residents. They must complete a homebuyer education course and intend to live in the home as a primary residence. Additionally, the property price cannot exceed CalHFA levels.
California Mortgage Calculator: Afford the California Dream
Dreaming of California? Plug some numbers into our California mortgage calculator and see how much you'll pay for a home in the Golden State!
