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San Luis Obispo's university-driven market creates strong demand from first-time buyers and families. FHA's 3.5% down payment requirement opens homeownership to buyers without large cash reserves.
Condos near Cal Poly and single-family homes in older neighborhoods often meet FHA standards. The program works well for buyers targeting properties under the local conforming limit.
FHA Loans in San Luis Obispo
You need a 580 credit score for 3.5% down. Scores from 500-579 require 10% down. FHA allows debt-to-income ratios up to 57% with compensating factors.
Two years of stable employment history is standard. Recent bankruptcy or foreclosure requires waiting periods. FHA accepts gift funds for your entire down payment.
Local decision guide
Use this guide to connect fha loans eligibility, lender expectations, and local market factors before comparing payment options in San Luis Obispo.
San Luis Obispo's university-driven market creates strong demand from first-time buyers and families. FHA's 3.5% down payment requirement opens homeownership to buyers without large cash reserves.
Condos near Cal Poly and single-family homes in older neighborhoods often meet FHA standards. The program works well for buyers targeting properties under the local conforming limit.
You need a 580 credit score for 3.5% down. Scores from 500-579 require 10% down. FHA allows debt-to-income ratios up to 57% with compensating factors.
Most lenders in San Luis Obispo offer FHA loans, but overlays vary. Some require higher reserves or stricter property standards than FHA minimums.
Our access to 200+ wholesale lenders means we find programs accepting lower credit scores or recent credit events. Rate differences of 0.25% to 0.5% are common between lenders for identical borrowers.
FHA mortgage insurance runs higher than conventional PMI and stays for the loan's life on most loans. Buyers planning to stay long-term should calculate whether refinancing to conventional later makes sense.
Property condition is where deals fall apart. FHA appraisers flag peeling paint, roof issues, and safety hazards. Get a pre-inspection before going under contract on older homes.
Conventional loans require just 3% down now and drop PMI once you hit 20% equity. If your credit is above 680, conventional often costs less monthly despite similar down payments.
VA loans beat FHA for eligible service members with no down payment and no monthly mortgage insurance. USDA works for properties outside city limits with zero down for qualified buyers.
San Luis Obispo's older housing stock means FHA appraisals require extra attention. Properties built before 1978 need lead paint disclosures and may trigger repairs.
Condo buyers must verify their complex is FHA-approved before making offers. Not all HOAs maintain required approval status. Downtown and campus-area condos typically have established FHA approval.
You need 580 for 3.5% down. Scores between 500-579 require 10% down. Some lenders add overlays requiring 600 minimum.
Yes, if the condo complex is FHA-approved. Check approval status before making an offer. Not all complexes maintain FHA certification.
You pay 1.75% upfront plus annual premiums of 0.55% to 0.85% based on loan amount and down payment. Rates vary by borrower profile and market conditions.
Minor repairs required by appraisal must be completed before closing. Major issues may require FHA 203(k) renovation financing instead.
Yes, once you reach 20% equity. Conventional refinancing eliminates lifetime mortgage insurance. Most borrowers benefit after 5-7 years.