Question 1

What credit score do I need for an FHA loan in Morro Bay?

Accepted Answer

580 gets you the 3.5% down program. Scores between 500-579 require 10% down, and below 500 won't qualify.

Question 2

Does FHA mortgage insurance ever go away?

Accepted Answer

Not on 3.5% down loans—it stays for the loan's life. Refinance to conventional once you hit 20% equity to drop it.

Question 3

Can I use FHA for a condo near Morro Rock?

Accepted Answer

Only if the condo complex is FHA-approved. Many coastal HOAs aren't on the approved list, so verify before writing an offer.

Question 4

What's the FHA loan limit in San Luis Obispo County?

Accepted Answer

Limits adjust yearly based on median home prices. As of early 2026, most Morro Bay properties fall within the county ceiling.

Question 5

How does coastal location affect my FHA appraisal?

Accepted Answer

Appraisers check flood zones and erosion risk. Properties in high-risk areas need flood insurance, which increases monthly costs.

Question 6

Can I buy a fixer-upper with FHA in Morro Bay?

Accepted Answer

Yes, through FHA 203(k) rehab loans. You finance purchase and repairs in one loan, but the property must meet safety standards first.

FHA Loans in Morro Bay: 3.5% Down in a Coastal California Market