Question 1

What's the 2026 conforming loan limit in San Luis Obispo County?

Accepted Answer

The conforming limit is $1,000,500. FHA and VA loans also max out at $1,000,500 here. Any loan above that is jumbo.

Question 2

Do I need 20% down to avoid PMI on a conventional loan?

Accepted Answer

Yes — 20% down eliminates PMI entirely. With 5% to 15% down, PMI applies. PMI cancels automatically at 78% LTV.

Question 3

What credit score do I need for a conventional loan?

Accepted Answer

Conventional loans typically start at 640 FICO. Higher scores open better rates and terms. Most lenders require 620 FICO minimum for FHA.

Question 4

Is San Luis Obispo County an FHA high-cost area?

Accepted Answer

Yes. FHA loan limits here match the conforming ceiling at $1,000,500. This high-cost designation means FHA and VA loans carry the same cap.

Question 5

Is San Luis Obispo County a VA high-cost area?

Accepted Answer

Yes. VA loans in this county max out at $1,000,500. VA funding fees still apply with this high-cost designation.

Question 6

What's the minimum down payment for an FHA loan?

Accepted Answer

FHA requires 3.5% down with a 580 FICO score. With 10% or more down, mortgage insurance cancels after 11 years. Below 10% down, MIP runs for life.

Question 7

Can I get a VA loan with zero down in Morro Bay?

Accepted Answer

Yes. VA loans require zero down for eligible veterans and active duty. The funding fee replaces PMI (2.15% at zero down on first use). A 10% disability rating exempts you from the funding fee.

Question 8

How does the Shabang Music Festival affect the Morro Bay housing market?

Accepted Answer

Shabang draws thousands annually and boosts short-term rental demand. This can raise property values for investors but may increase noise concerns for primary residents.

Question 9

What income do I need to qualify for a conventional loan?

Accepted Answer

Debt-to-income ratio matters more than raw income. Most lenders cap DTI at 43% to 50%. At the county median of $93,398, you can typically support a loan around $300,000 to $350,000.

Question 10

Can I carry two mortgages while buying in Morro Bay?

Accepted Answer

Yes — if you have equity and can qualify on both mortgages, carrying both temporarily is possible. Most buyers close on the new home within 30 days of selling the old one.

Question 11

What's the difference between FHA and VA loans at the $1,000,500 limit?

Accepted Answer

VA offers zero down; FHA requires 3.5% minimum. VA has no PMI (funding fee instead). FHA MIP runs for life if down payment is under 10%.

Question 12

How long does it take to close on a home in Morro Bay?

Accepted Answer

Typical closing is 30 to 45 days from offer to funding. Appraisal, title search, and underwriting are the main delays. Cash offers close faster; financed deals depend on lender speed.

Question 13

What are typical closing costs in San Luis Obispo County?

Accepted Answer

Closing costs run 2% to 5% of the loan amount. Lender fees, title insurance, appraisal, and escrow make up most of the bill. Ask your lender for a Loan Estimate within three days of application.

Question 14

Can I use a USDA loan to buy in Morro Bay?

Accepted Answer

USDA loans are available in eligible rural areas of San Luis Obispo County. Income limits apply and are set per household size. Not all Morro Bay neighborhoods qualify; check USDA eligibility for your specific address.

Question 15

What happens if my offer price exceeds $1,000,500?

Accepted Answer

Any loan above $1,000,500 is jumbo. Jumbo loans typically require 20% down, 700+ FICO, and 6 to 12 months reserves. Rates usually run 0.125% to 0.5% above conforming.

Morro Bay mortgage questions answered