Downey Mortgage FAQs: Your Questions Answered by Local Brokers

FHA loans start at 580 credit score with 3.5% down. Conventional loans typically require 620, though some lenders go lower with compensating factors like higher down payments.

FHA requires 3.5% down, conventional loans allow 3% for first-time buyers. VA and USDA loans offer zero down if you qualify based on military service or property location.

W-2 earners need two years of tax returns, recent pay stubs, and bank statements. Self-employed borrowers need business tax returns and profit/loss statements or bank statement loans.

Pre-approval takes 1-3 days with complete documents. Full underwriting to closing typically runs 21-30 days for conventional loans, 30-45 days for FHA and VA.

Yes, ITIN loans don't require Social Security numbers or permanent residency. You'll need larger down payments, typically 15-20%, and document income through alternative methods.

FHA allows lower credit scores and smaller down payments but requires mortgage insurance for the loan's life. Conventional loans drop PMI at 78-80% loan-to-value.

Veterans, active-duty service members, and eligible spouses qualify for VA loans with zero down payment. You'll need a Certificate of Eligibility and meet credit standards.

Expect 2-5% of the purchase price for closing costs including appraisal, title insurance, escrow fees, and lender charges. Rates vary by loan type and lender.

Bank statement loans use 12-24 months of business or personal bank deposits to calculate income. They work well for 1099 contractors and business owners with tax write-offs.

The 2024 conforming loan limit is $766,550 for single-family homes in LA County. Loans above this amount require jumbo financing with different qualification standards.

DSCR loans qualify you based on the property's rental income, not your personal income. The rent must cover 100-125% of the mortgage payment depending on lender.

FHA allows up to 4-unit properties if you occupy one unit as your primary residence. Down payment stays at 3.5% regardless of unit count.

North Downey near Furman Park attracts families for schools and walkability. Areas near Downey Landing appeal to buyers wanting retail access and newer construction.

Paying points makes sense if you'll keep the loan long enough to recoup the upfront cost through lower payments. Break-even typically occurs at 3-5 years.

ARMs offer lower initial rates that adjust after a fixed period like 5, 7, or 10 years. They work if you plan to sell or refinance before adjustment.

FHA allows financing 2 years after bankruptcy discharge, 3 years after foreclosure. Conventional loans typically require 4 years for bankruptcy, 7 for foreclosure.

DTI compares your monthly debt payments to gross income. Most lenders cap conventional loans at 45-50% DTI, though some programs allow higher with strong credit.

FHA requires upfront and monthly mortgage insurance. Conventional loans require PMI with less than 20% down, but it drops automatically at 78% loan-to-value.

All loan types accept gift funds from family members with a signed gift letter. FHA and VA have no minimum borrower contribution requirement.

Bridge loans provide short-term financing to buy a new home before selling your current one. They work for strong borrowers who need temporary liquidity.

You pay only interest for an initial period, typically 10 years, then principal and interest after. Monthly payments jump significantly when the interest-only period ends.

Pre-qualification estimates what you might afford based on stated information. Pre-approval involves document verification and credit checks, giving you actual buying power.

Foreign national loans allow non-residents to purchase US property with 20-30% down. You'll need a valid passport, visa, and verifiable foreign income or assets.

Asset depletion uses investment accounts, savings, and retirement funds to calculate qualifying income. Lenders divide total assets by 360 months to determine monthly income.

15-year mortgages have higher monthly payments but lower rates and less total interest. 30-year loans offer payment flexibility and free up cash for investments.

Jumbo loans exceed $766,550 in LA County and require stronger credit, lower DTI, and larger reserves. Expect minimum 680-700 credit scores and 10-20% down.

Refinancing into a conventional loan with 20% equity eliminates PMI. You need sufficient equity and credit to qualify for the new loan at current rates.

HELOCs provide revolving credit lines with variable rates you draw as needed. Home equity loans give lump sums with fixed rates and set repayment terms.

Properties in FEMA flood zones require flood insurance. Downey has limited flood zone areas, but lenders order flood certifications during escrow to verify requirements.

Rate locks guarantee your interest rate for 30-60 days during escrow. Lock when rates are favorable or you're risk-averse about market volatility.

FHA 203k loans finance both purchase and renovations in one mortgage. You can buy properties needing repairs that wouldn't qualify for standard financing.

Low appraisals create a gap between contract price and loan amount. You can renegotiate price, bring extra cash, or use appraisal gap coverage if included.

Construction loans fund building in phases as work completes, converting to permanent financing after. They require detailed plans, builder contracts, and larger down payments.

Recent bankruptcies, active collections, tax liens, and delinquent federal debt cause denials. Most issues can be resolved with payment plans or seasoning time.

Student loans count in DTI calculations using either the payment shown or 1% of the balance monthly. Income-driven repayment plans may lower qualifying debt.

Portfolio ARMs are held by lenders rather than sold to Fannie or Freddie, allowing flexible qualification standards. They suit borrowers with strong assets but complex income.

Buying makes sense if you'll stay 5+ years and can afford 3-5% closing costs plus down payment. Rates vary by borrower profile and market conditions.

Lenders qualify you up to 45-50% DTI, but comfortable payments typically stay under 28% of gross income. Factor in property taxes, insurance, and maintenance costs.

Strong pre-approval, complete documentation, and quick appraisal scheduling speed closings. Conventional loans with waived contingencies can close in 14-21 days.

Homeowners 62+ can convert home equity to cash without monthly payments through reverse mortgages. The loan balance grows over time and is repaid when you sell or pass away.