Home Loan Options for Buyers in Los Angeles County
Navigating the home-buying process in Los Angeles County can be a thrilling yet complex experience. With its vibrant culture, beautiful landscapes, and sought-after neighborhoods, it’s no surprise that many potential buyers are eager to take the plunge. However, before securing your dream home, it’s important to understand the various home loan options available to you.
Here’s a breakdown of the most common home loan options for Los Angeles County buyers, helping you choose the right path for your financial situation and goals, along with where to find each type of loan, the associated requirements, and why you might choose each loan.
Jumbo Loans
Why You Would Use This Loan:
Jumbo loans are ideal for buyers purchasing high-value homes in Los Angeles County, where home prices often exceed the conforming loan limits. If you’re purchasing a luxury property or a home in a high-demand neighborhood, a jumbo loan allows you to finance more than conventional loans can offer.
Requirements:
Down payment: Typically 20% or more.
Credit score: Usually 700 or higher.
Loan amount: Exceeds $1,100,000 (depending on the area).
DTI ratio: Generally 43%-45%.
Where to Go:
Jumbo loans are available through many large banks and mortgage lenders, such as Chase, Wells Fargo, Citibank, and local mortgage brokers.
Conventional Loans
Why You Would Use This Loan:
Conventional loans are the go-to choice for many buyers because they offer competitive interest rates and flexibility. If you have a solid credit score and can make a decent down payment, a conventional loan may be the most straightforward and affordable option for purchasing a home.
Requirements:
Down payment: As low as 3% for first-time buyers; 20% to avoid PMI.
Credit score: Generally 620 or higher.
DTI ratio: Typically 36%-43%.
Where to Go:
Available through private lenders such as Wells Fargo, Bank of America, Chase, and smaller local banks or mortgage brokers.
Fixed-Rate Mortgages
Why You Would Use This Loan:
Fixed-rate mortgages are ideal for buyers who want predictable, stable payments over the life of the loan. If you plan on staying in your home long-term and want the security of a consistent monthly payment, a fixed-rate mortgage may be the best choice.
Requirements:
Down payment: Typically 20%, but as low as 3%-5%.
Credit score: Generally 620 or higher.
Loan terms: 15, 20, or 30 years.
Where to Go:
Fixed-rate mortgages are offered by most banks and credit unions, including Wells Fargo, Chase, and Quicken Loans.
Adjustable-Rate Mortgages (ARMs)
Why You Would Use This Loan:
ARMs are often suitable for buyers who expect to sell or refinance before the interest rate adjusts. If you're purchasing a home but don’t plan on living there for the long term, an ARM can provide lower initial interest rates compared to a fixed-rate mortgage, which can save you money in the short term.
Requirements:
Down payment: Typically 5%-20%.
Credit score: Generally 620 or higher.
Loan terms: 5/1, 7/1, and 10/1 ARMs are common.
Where to Go:
ARMs are available from lenders like Wells Fargo, Bank of America, Quicken Loans, and local mortgage brokers.
Foreign National Loans
Why You Would Use This Loan:
Foreign national loans are perfect for buyers who are non-U.S. citizens or non-permanent residents looking to invest in a property in Los Angeles. This type of loan is tailored for international buyers who may not meet the standard U.S. lending criteria but still wish to own property in California.
Requirements:
Down payment: Typically 30% or more.
Credit score: Varies by lender; typically 650 or higher.
DTI ratio: Generally 40% or lower.
Eligibility: Non-U.S. citizens and non-permanent residents.
Where to Go:
Foreign national loans are offered by specialty lenders and banks that work with international clients, such as Citibank, HSBC, or mortgage brokers specializing in foreign nationals.
VA Loans
Why You Would Use This Loan:
VA loans are a great option for veterans, active-duty service members, and qualifying surviving spouses. If you are eligible for a VA loan, you can take advantage of the 0% down payment and competitive interest rates, making homeownership much more accessible.
Requirements:
Down payment: None required.
Credit score: Typically 620 or higher.
DTI ratio: Usually 41% or lower.
Eligibility: Available to veterans, active-duty service members, and qualifying surviving spouses.
Where to Go:
VA loans are available through VA-approved lenders, such as Navy Federal Credit Union, USAA, and banks like Wells Fargo and Bank of America.
FHA Loans
Why You Would Use This Loan:
FHA loans are perfect for first-time homebuyers or those with less-than-perfect credit. With a lower down payment requirement (as low as 3.5%) and more lenient credit score requirements, FHA loans make homeownership more accessible to a wider range of buyers.
Requirements:
Down payment: 3.5% minimum.
Credit score: Typically 580 or higher.
DTI ratio: Typically 31% (housing) and 43% (overall).
Where to Go:
FHA loans can be obtained through FHA-approved lenders, including Quicken Loans, Caliber Home Loans, and Rocket Mortgage.
Bridge Loans
Why You Would Use This Loan:
Bridge loans are ideal for homeowners who are selling a property but need to purchase a new one before the old one sells. They offer short-term financing that bridges the gap, providing the funds necessary to buy your next home while waiting for your current home to sell.
Requirements:
Down payment: Typically 20% or more.
Credit score: Generally 620 or higher.
Loan terms: Short-term, usually 6 months to 1 year.
Where to Go:
Bridge loans are available from larger banks, private lenders, and mortgage brokers.
CalVet Loans (California Veterans Loans)
Why You Would Use This Loan:
CalVet loans are a fantastic option for California veterans and active-duty service members. These loans offer no down payment for qualified veterans and competitive interest rates, making homeownership more accessible for military families.
Requirements:
Eligibility: Available to veterans and active-duty military members who are California residents or plan to live in California.
Down payment: As low as 0%.
Credit score: Typically 620 or higher.
DTI ratio: 41% or lower.
Where to Go:
CalVet loans are offered through the California Department of Veterans Affairs. More information can be found on their website.
Home Equity Line of Credit (HELOC)
Why You Would Use This Loan:
A HELOC allows you to borrow against the equity in your home. It’s perfect for homeowners who want to fund home improvements, pay off high-interest debt, or manage other financial needs without refinancing their primary mortgage.
Requirements:
Down payment: Not required, based on home equity.
Credit score: Generally 620 or higher.
Loan amount: Typically up to 85% of home equity.
Where to Go:
HELOCs are offered by banks and credit unions, such as Wells Fargo, Bank of America, and US Bank.
Reverse Mortgages
Why You Would Use This Loan:
Reverse mortgages are specifically designed for older homeowners (62 or older) who have significant home equity and want to supplement their retirement income. Unlike traditional mortgages, reverse mortgages do not require monthly payments and are repaid when the homeowner moves or passes away.
Requirements:
Eligibility: Homeowners aged 62 or older.
Down payment: Not required (based on home equity).
Credit score: Typically 620 or higher.
Loan amount: Based on home equity.
Where to Go:
Reverse mortgages are available from lenders like AAG (American Advisors Group) or major banks such as Wells Fargo and Chase.
Fannie Mae HomeStyle Renovation Loans
Why You Would Use This Loan:
The HomeStyle Renovation loan allows you to finance the purchase of a home and the cost of renovations in one loan. It’s ideal for buyers who are interested in homes that may need updates or repairs but want to roll the costs into their mortgage.
Requirements:
Down payment: 5% minimum.
Credit score: Typically 620 or higher.
Loan type: Conventional loan allowing home repairs or renovations.
Where to Go:
Available through Fannie Mae-approved lenders, such as Wells Fargo, Chase, and Rocket Mortgage.
Energy-Efficient Mortgages (EEMs)
Why You Would Use This Loan:
EEMs are designed for buyers who want to make energy-efficient upgrades to their new home. If you’re looking to install solar panels, upgrade insulation, or make other green improvements, an EEM helps finance those upgrades within the mortgage.
Requirements:
Down payment: Typically 3%-5%.
Credit score: Generally 620 or higher.
Loan amount: Based on cost of energy-efficient improvements.
Where to Go:
Offered through FHA, VA, and Fannie Mae programs, available at lenders like Bank of America, Quicken Loans, and other FHA-approved lenders.
Doctor Loans
Why You Would Use This Loan:
Doctor loans are tailored for medical professionals with little-to-no down payment and high borrowing limits. If you’re a physician or other healthcare professional, this loan is designed to accommodate your unique financial situation, allowing you to purchase a home sooner.
Requirements:
Eligibility: Medical professionals (doctors, dentists, etc.).
Down payment: As low as 0%-10%.
Credit score: Typically 700 or higher.
DTI ratio: Generally up to 45%-50%.
Where to Go:
Doctor loans are available through specialized lenders like SoFi, Laurel Road, and local banks.
With this range of loan options, homebuyers in Los Angeles County can choose the one that best fits their needs, financial situation, and long-term goals. Whether you’re purchasing a luxury home, buying your first property, or refinancing, there’s a loan that can help you get started.
Reach out HERE so that I can connect you with a trusted mortgage broker or lender that my clients have had great success with, allowing you to explore your options in greater detail and find the best financing solution for your real estate journey.
Best regards,
Lindsay Woolf | CA DRE #02236711
DOMO Real Estate | CA DRE #01290500
Disclaimer: The information provided in this blog post is for general informational purposes only and does not constitute legal advice. Real estate transactions can be complex and subject to local regulations.
