Question 1

How long does it take to close a mortgage in Chico?

Accepted Answer

Most purchases close in 21 to 30 days with a full file upfront. Complex loans like bank statement or DSCR can take 30 to 45 days.

Question 2

What documents do I need to apply for a mortgage?

Accepted Answer

Bring your last two pay stubs, two years of W-2s, two months of bank statements, and a government ID. Self-employed borrowers need more.

Question 3

What credit score do I need to buy a home in Chico?

Accepted Answer

FHA allows scores down to 580 with 3.5% down. Conventional loans typically require 620 or higher.

Question 4

What is the minimum down payment for a Chico home?

Accepted Answer

VA and USDA loans require zero down. FHA requires 3.5%. Conventional can go as low as 3% for qualified buyers.

Question 5

Are USDA loans available in Chico or Butte County?

Accepted Answer

Parts of Butte County qualify for USDA rural loans. Chico city limits typically do not. We check eligibility by exact address.

Question 6

Does wildfire zone status affect my mortgage approval?

Accepted Answer

Yes. Lenders require fire insurance, and some insurers have pulled out of high-risk Butte County zones. No insurance means no loan.

Question 7

What loan types are available for Chico investors?

Accepted Answer

DSCR loans qualify on rental income, not your tax returns. We also offer hard money and bridge loans for fix-and-flip deals.

Question 8

What is a DSCR loan and who is it for?

Accepted Answer

DSCR stands for Debt Service Coverage Ratio. It qualifies based on the property's rental income — ideal for investors who own multiple properties.

Question 9

Can I get a mortgage in Chico if I'm self-employed?

Accepted Answer

Yes. Bank statement loans use 12 or 24 months of deposits instead of tax returns. 1099 and P&L loans are also options.

Question 10

What is a bank statement loan?

Accepted Answer

It's a non-QM loan that uses your bank deposits to prove income. Standard is 12 months of personal or business statements.

Question 11

What are closing costs in Chico, California?

Accepted Answer

Expect 2% to 5% of the loan amount in closing costs. That covers lender fees, title, escrow, appraisal, and prepaid items.

Question 12

Who pays closing costs — buyer or seller?

Accepted Answer

It's negotiable. Sellers can credit closing costs in the purchase contract. VA loans limit certain fees the veteran can pay.

Question 13

What is PMI and when do I have to pay it?

Accepted Answer

PMI is private mortgage insurance — required on conventional loans when you put less than 20% down. It cancels at 80% LTV.

Question 14

Does FHA require mortgage insurance?

Accepted Answer

Yes. FHA charges an upfront premium of 1.75% and an annual premium. Unlike PMI, FHA insurance stays for the life of the loan in most cases.

Question 15

What is the conforming loan limit in Butte County?

Accepted Answer

Butte County follows the standard conforming limit set by FHFA each year. Loans above that limit require jumbo financing.

Question 16

Do I need a jumbo loan to buy in Chico?

Accepted Answer

Most Chico purchases fall within conforming limits. Luxury properties or larger parcels may push you into jumbo territory.

Question 17

What is a jumbo loan and how is it different?

Accepted Answer

Jumbo loans exceed conforming limits and aren't backed by Fannie or Freddie. Lenders set their own rules — usually tighter credit and reserve requirements.

Question 18

What is an FHA loan and who should use it?

Accepted Answer

FHA is a government-backed loan with low down payment and flexible credit requirements. Best for first-time buyers with limited savings or lower credit scores.

Question 19

FHA vs Conventional — which is better for Chico buyers?

Accepted Answer

Conventional wins if your score is 700+ and you have 5% down. FHA beats conventional if your score is under 660.

Question 20

What is a VA loan and who qualifies?

Accepted Answer

VA loans are for veterans, active duty, and surviving spouses. Zero down, no PMI, and typically lower rates than conventional.

Question 21

Can I use a VA loan to buy in Chico?

Accepted Answer

Yes. VA loans work anywhere in Chico. You need a Certificate of Eligibility and a property that passes VA appraisal.

Question 22

What is an adjustable-rate mortgage (ARM)?

Accepted Answer

An ARM starts with a fixed rate for 5, 7, or 10 years, then adjusts annually. Makes sense if you plan to sell or refinance before the adjustment.

Question 23

What is a bridge loan and when does it make sense in Chico?

Accepted Answer

A bridge loan taps your current home's equity to fund a new purchase before you sell. Useful in a fast market when timing doesn't line up.

Question 24

What is a construction loan?

Accepted Answer

It funds a home build in draws as construction progresses. After completion, it converts to a permanent mortgage — called a one-time close.

Question 25

Can I build a new home in Chico with a construction loan?

Accepted Answer

Yes, though lender options are narrower than for existing homes. We work with wholesale lenders that specialize in Butte County construction deals.

Question 26

What is a HELOC and how does it work?

Accepted Answer

A HELOC is a revolving credit line secured by your home equity. You draw funds as needed and pay interest only on what you use.

Question 27

Can I get a reverse mortgage in Chico?

Accepted Answer

Yes, if you're 62 or older and have enough equity. A reverse mortgage pays you — you don't make monthly mortgage payments.

Question 28

What is an asset depletion loan?

Accepted Answer

Lenders divide your liquid assets over a set number of months to create qualifying income. Good for retirees with savings but no regular paycheck.

Question 29

What is an ITIN loan?

Accepted Answer

ITIN loans serve borrowers without a Social Security number. You qualify using an Individual Tax Identification Number instead.

Question 30

What is a portfolio ARM loan?

Accepted Answer

A portfolio ARM is held by the lender rather than sold to investors. Terms are more flexible — useful for complex borrower profiles.

Question 31

How does an interest-only loan work?

Accepted Answer

You pay only interest for a set period, usually 5 to 10 years. Monthly payments are lower, but the principal balance doesn't drop during that time.

Question 32

What is a profit and loss statement loan?

Accepted Answer

A P&L loan uses a CPA-prepared profit and loss statement instead of tax returns. Common for self-employed borrowers with strong gross revenue.

Question 33

What is a community mortgage?

Accepted Answer

Community mortgages are designed for borrowers in underserved areas. They often feature reduced PMI and flexible income guidelines.

Question 34

What is a foreign national loan?

Accepted Answer

Foreign national loans serve non-U.S. residents buying property in California. No SSN or U.S. credit history required — terms are stricter.

Question 35

How does SRK CAPITAL find the best rate for me?

Accepted Answer

We submit your file to multiple wholesale lenders and compare offers. You see competing options — not just whatever one bank decides to offer.

Question 36

How much income do I need to qualify for a mortgage in Chico?

Accepted Answer

Lenders look at debt-to-income ratio, not a minimum income. Most conventional lenders want your total debts under 43% to 45% of gross monthly income.

Question 37

What is debt-to-income ratio and why does it matter?

Accepted Answer

DTI compares your monthly debt payments to your gross income. A high DTI — above 45% — will get most conventional loans declined.

Question 38

Can I get a mortgage after bankruptcy in Chico?

Accepted Answer

Yes. FHA requires a 2-year wait after Chapter 7. Conventional is 4 years. Some non-QM loans have shorter waiting periods.

Question 39

What is an equity appreciation loan?

Accepted Answer

It's a product that lets you access a portion of future home value gains now. Terms vary — review carefully before signing.

Question 40

How do mortgage points work?

Accepted Answer

One point equals 1% of the loan amount paid upfront to lower your rate. It makes sense only if you keep the loan long enough to recoup the cost.

Chico, CA Mortgage FAQs Answered by a Real Broker