Question 1

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

Accepted Answer

FHA loans start at 580, but you'll get better rates at 620+. Conventional loans typically need 620 minimum, though some portfolio lenders go lower for strong compensating factors.

Question 2

How much down payment do I need in Commerce?

Accepted Answer

FHA requires 3.5% down, conventional loans allow 3-5% for primary homes. Investment properties need 15-25% depending on the loan program and property type.

Question 3

Can I buy a Commerce property with an ITIN instead of a Social Security number?

Accepted Answer

Yes, ITIN loans work for buyers without Social Security numbers. You'll need 15-20% down and proof of income through tax returns or bank statements.

Question 4

What mortgage programs work best for self-employed buyers in Commerce?

Accepted Answer

Bank statement loans use 12-24 months of deposits instead of tax returns. Profit & Loss statement programs work too, but lenders scrutinize them harder than bank statements.

Question 5

How long does it take to close on a Commerce home?

Accepted Answer

Conventional and FHA loans close in 21-30 days. Portfolio loans and bank statement programs take 30-45 days due to extra underwriting review.

Question 6

Do I need mortgage insurance in Commerce?

Accepted Answer

You'll pay PMI on conventional loans under 20% down until you hit 20% equity. FHA charges upfront and monthly insurance for the loan's life in most cases.

Question 7

What documents do I need to apply for a mortgage?

Accepted Answer

W-2 buyers need two years tax returns, 60 days paystubs, and two months bank statements. Self-employed borrowers add business tax returns and a year-to-date profit & loss statement.

Question 8

Can I buy an investment property in Commerce with a low down payment?

Accepted Answer

Investment properties require 15% down minimum, typically 20-25% for best rates. DSCR loans focus on rental income instead of personal income for approval.

Question 9

What's the difference between FHA and conventional loans?

Accepted Answer

FHA accepts 580 credit and 3.5% down but charges mortgage insurance for life. Conventional needs 620+ credit, allows PMI removal at 20% equity, and offers better rates above 740.

Question 10

How do DSCR loans work for Commerce rental properties?

Accepted Answer

DSCR loans approve based on rental income covering the mortgage payment. No personal income verification needed, but you'll need 20-25% down and 640+ credit.

Question 11

Can I use gift money for my down payment in Commerce?

Accepted Answer

Yes, FHA and conventional loans allow gifted down payments from family. You'll need a gift letter stating the money doesn't require repayment.

Question 12

What are closing costs in Commerce typically?

Accepted Answer

Expect 2-5% of the purchase price for closing costs. This includes lender fees, title insurance, escrow, and recording fees in Los Angeles County.

Question 13

Should I pay points to lower my rate?

Accepted Answer

Points make sense if you're keeping the loan 5+ years. One point costs 1% of the loan and drops your rate about 0.25%.

Question 14

What's a bank statement loan and who needs one?

Accepted Answer

Bank statement loans use deposits to calculate income instead of tax returns. Perfect for self-employed buyers who write off significant business expenses.

Question 15

Can I buy a fixer-upper in Commerce with FHA financing?

Accepted Answer

FHA 203(k) loans cover purchase price plus renovation costs in one loan. The property must meet minimum safety standards before you can close.

Question 16

How does debt-to-income ratio affect my approval?

Accepted Answer

Most lenders cap DTI at 43-50% including your new mortgage payment. FHA allows up to 56.99% with strong credit and cash reserves.

Question 17

What's the advantage of using a mortgage broker in Commerce?

Accepted Answer

Brokers shop 200+ lenders to find programs banks don't offer. We see approval when your bank says no, especially for self-employed and investor clients.

Question 18

Can I refinance if I'm self-employed?

Accepted Answer

Yes, same programs that work for purchase work for refinance. Bank statement and 1099 loans handle self-employed income without full tax return review.

Question 19

What's a jumbo loan and when do I need one?

Accepted Answer

Jumbo loans exceed $832,750 in Los Angeles County. They require 10-20% down, 680+ credit, and stronger income documentation than conforming loans.

Question 20

How do ARMs compare to fixed-rate mortgages?

Accepted Answer

ARMs start 0.5-1% lower than fixed rates but adjust after 5, 7, or 10 years. They work if you're selling or refinancing before the adjustment period ends.

Question 21

Can foreign nationals buy property in Commerce?

Accepted Answer

Yes, foreign national loans require 20-40% down depending on visa status. No US credit history needed, but you'll need foreign bank statements and income proof.

Question 22

What's an asset depletion loan?

Accepted Answer

Asset depletion loans qualify you using investment accounts divided by 360 months. Retirees and high-net-worth buyers use these when income doesn't show on tax returns.

Question 23

Do I need reserves to close on a Commerce home?

Accepted Answer

Investment properties need 6-12 months reserves depending on how many properties you own. Primary homes rarely require reserves unless DTI is high.

Question 24

How does a bridge loan work for Commerce buyers?

Accepted Answer

Bridge loans let you buy before selling your current home. Rates run 7-10%, terms last 6-12 months, and you'll need strong equity in your existing property.

Question 25

Can I buy a multi-unit property in Commerce with FHA?

Accepted Answer

FHA finances 2-4 unit properties with 3.5% down if you live in one unit. Rental income from other units helps you qualify.

Question 26

What credit issues prevent mortgage approval?

Accepted Answer

Recent foreclosure, bankruptcy under two years old, or active collections over $2,000 typically block approval. Disputes on your credit report freeze underwriting.

Question 27

How do interest-only loans work?

Accepted Answer

You pay only interest for 10 years, then principal and interest after. Payment jumps significantly when the interest-only period ends.

Question 28

What's the difference between pre-qualification and pre-approval?

Accepted Answer

Pre-qualification is an estimate based on what you tell us. Pre-approval means underwriting reviewed your documents and verified your ability to borrow.

Question 29

Can I use VA loans to buy investment property in Commerce?

Accepted Answer

No, VA loans require owner occupancy. You can buy a multi-unit and rent extra units, but one unit must be your primary residence.

Question 30

How do construction loans work for Commerce lots?

Accepted Answer

Construction loans fund in draws as building progresses. You'll need 20-25% down, detailed plans, and a licensed contractor before approval.

Question 31

What's a HELOC and when should I use one?

Accepted Answer

HELOCs let you borrow against home equity with a credit line. Rates adjust monthly, making them better for short-term needs than long-term borrowing.

Question 32

Can I get a mortgage with recent late payments?

Accepted Answer

Late payments under 30 days don't report to credit bureaus. Anything 30+ days late in the past 12 months makes approval harder unless you have a solid explanation.

Question 33

How does rental income count toward qualifying?

Accepted Answer

Lenders use 75% of lease agreement rent or tax return Schedule E income. You'll need a signed lease and proof the tenant is paying.

Question 34

What mortgage rate should I expect in Commerce?

Accepted Answer

Rates vary by credit score, down payment, and loan type. We shop 200+ lenders daily to find your best rate based on your specific borrower profile.

Question 35

Can I buy a manufactured home in Commerce with financing?

Accepted Answer

Yes, if it's permanently attached to land you own. FHA and conventional loans finance manufactured homes, but rates run slightly higher than site-built properties.

Commerce Mortgage FAQs: Your Questions Answered by Local Loan Experts