Question 1

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

Accepted Answer

You can qualify with 580 for FHA or 620 for conventional. Jumbo loans typically require 680 minimum, though some lenders go lower with compensating factors.

Question 2

How much do I need for a down payment in LA?

Accepted Answer

FHA allows 3.5% down, conventional goes as low as 3%. Jumbo loans usually require 10-20% depending on loan amount and property type.

Question 3

What counts as a jumbo loan in Los Angeles County?

Accepted Answer

Any loan above $832,750 is jumbo in LA County. Most single-family homes in desirable neighborhoods exceed this limit.

Question 4

Can I buy a home in LA if I'm self-employed?

Accepted Answer

Yes. We offer bank statement loans, 1099 loans, and P&L statement programs that don't require tax returns.

Question 5

How long does it take to close on a mortgage in Los Angeles?

Accepted Answer

Standard purchase loans close in 21-30 days. Cash-out refinances and complex scenarios can take 30-45 days depending on documentation.

Question 6

What's the difference between FHA and conventional loans?

Accepted Answer

FHA allows lower credit scores and smaller down payments but requires mortgage insurance for life on most loans. Conventional drops PMI once you hit 20% equity.

Question 7

Do I need to pay property taxes upfront when buying in LA?

Accepted Answer

Lenders collect property tax reserves at closing, typically 2-6 months. California property tax is roughly 1.25% of purchase price annually in most LA areas.

Question 8

What closing costs should I expect in Los Angeles?

Accepted Answer

Plan for 2-5% of the purchase price. This includes lender fees, title insurance, escrow, appraisal, and prepaid property taxes.

Question 9

Can I use a DSCR loan for an investment property in LA?

Accepted Answer

Yes. DSCR loans qualify you based on rental income, not personal income, which works well for LA investors with multiple properties.

Question 10

What documents do I need to get pre-approved?

Accepted Answer

Standard loans need two years of tax returns, two months of bank statements, and recent pay stubs. Alternative programs like bank statement loans skip tax returns.

Question 11

Are interest rates higher for jumbo loans?

Accepted Answer

Not always. Jumbo rates are often competitive with conforming rates, sometimes lower depending on your profile and down payment.

Question 12

Can I buy a condo in LA with an FHA loan?

Accepted Answer

Only if the building is FHA-approved. Many LA condos aren't approved, so conventional or portfolio loans become necessary.

Question 13

What's PMI and how do I avoid it?

Accepted Answer

PMI is private mortgage insurance required on conventional loans under 20% down. You avoid it by putting 20% down or using a piggyback second mortgage.

Question 14

How does a bank statement loan work?

Accepted Answer

Lenders use 12 or 24 months of business bank statements instead of tax returns. They average your deposits to calculate qualifying income.

Question 15

Can foreign nationals buy property in Los Angeles?

Accepted Answer

Yes. Foreign national loans don't require U.S. credit or Social Security numbers, though they need larger down payments, typically 30-40%.

Question 16

What's the benefit of an ARM over a fixed-rate mortgage?

Accepted Answer

ARMs start with lower rates than fixed loans. They make sense if you plan to sell or refinance within 5-7 years.

Question 17

Do I need reserves to qualify for a mortgage in LA?

Accepted Answer

Jumbo loans typically require 6-12 months of reserves. Conventional and FHA loans may not require reserves for primary residences.

Question 18

Can I use gift funds for my down payment?

Accepted Answer

Yes on most loan types. The donor needs to provide a gift letter confirming the funds don't require repayment.

Question 19

What's a bridge loan and when would I use one?

Accepted Answer

Bridge loans let you buy before selling your current home. They're common in competitive LA markets where sellers prefer non-contingent offers.

Question 20

How does a HELOC work?

Accepted Answer

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

Question 21

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 involves credit checks and document verification, making it much stronger for offers.

Question 22

Can I buy a multi-family property with an FHA loan in LA?

Accepted Answer

Yes, up to four units if you occupy one. FHA only requires 3.5% down even on multi-family investment properties.

Question 23

What's an ITIN loan?

Accepted Answer

ITIN loans serve borrowers without Social Security numbers who have Individual Taxpayer Identification Numbers. Down payments typically start at 15-20%.

Question 24

Should I pay points to lower my interest rate?

Accepted Answer

Only if you'll keep the loan long enough to recoup the cost. Each point costs 1% of the loan amount and typically reduces your rate by 0.25%.

Question 25

What debt-to-income ratio do I need to qualify?

Accepted Answer

Most programs max out at 43-50% DTI. Some portfolio loans go higher with strong compensating factors like high credit scores or reserves.

Question 26

Can I refinance if my home value dropped?

Accepted Answer

Limited options exist. FHA and VA offer streamline refinances that skip appraisals, but most conventional refis need adequate equity.

Question 27

What's a portfolio ARM?

Accepted Answer

Portfolio ARMs are held by the lender rather than sold to Fannie or Freddie. They offer more flexible underwriting for unique situations.

Question 28

Do I need an appraisal for a refinance?

Accepted Answer

Most refinances require appraisals. Streamline programs like FHA and VA skip them, and some conventional refis qualify for appraisal waivers.

Question 29

How much can I borrow with a VA loan in LA?

Accepted Answer

VA loans have no upper limit in LA County. Your qualifying amount depends on income, debts, and residual income requirements.

Question 30

What's the funding fee on a VA loan?

Accepted Answer

First-time VA buyers pay 2.15% with zero down. Subsequent use is 3.3%. The fee drops to 1.25% with 10% down or more.

Question 31

Can I use a 1099 loan if I'm a contractor?

Accepted Answer

Yes. 1099 loans use your gross 1099 income without deducting business expenses, which helps contractors qualify for higher amounts.

Question 32

What happens if my appraisal comes in low?

Accepted Answer

You can renegotiate the price, bring more cash to close, or cancel if you have an appraisal contingency. Some buyers split the difference with sellers.

Question 33

How do lenders calculate rental income for investment properties?

Accepted Answer

They use 75% of market rent to account for vacancies. DSCR loans require the property's rent to cover 1.0-1.25 times the mortgage payment.

Question 34

What's an asset depletion loan?

Accepted Answer

Asset depletion loans qualify you based on liquid assets like stocks and savings. Lenders divide your assets by 360 months to calculate income.

Question 35

Can I get a construction loan for a tear-down in LA?

Accepted Answer

Yes. Construction loans fund both the purchase and rebuild. You need detailed plans, builder contracts, and typically 20-25% down.

Question 36

What neighborhoods in LA are most competitive for buyers?

Accepted Answer

Silver Lake, Los Feliz, Venice, and West Hollywood see intense competition. Pre-approval and fast closings give you an edge in these markets.

Question 37

How does an interest-only loan work?

Accepted Answer

You pay only interest for a set period, typically 10 years. After that, payments adjust to include principal, which increases your monthly cost.

Question 38

What's a reverse mortgage?

Accepted Answer

Reverse mortgages let homeowners 62+ convert equity into cash without monthly payments. The loan gets repaid when you sell or pass away.

Question 39

Can I assume the seller's mortgage in LA?

Accepted Answer

Only if they have an assumable loan like FHA or VA. You still qualify through the lender and usually pay the seller their equity in cash.

Question 40

What's the advantage of working with a mortgage broker?

Accepted Answer

Brokers shop 200+ lenders to find the best rate and program for your situation. Banks only offer their own products.

Los Angeles Mortgage FAQs: Your Guide to Home Financing in LA