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in Los Altos Hills, CA
Los Altos Hills homebuyers have distinct mortgage options depending on their military service status and financial profile. Conventional loans offer flexibility for civilian buyers, while VA loans provide exceptional benefits for eligible veterans and service members.
Understanding the core differences between these two financing paths helps you make the right choice for your Santa Clara County property purchase. Each option carries unique advantages that align with different buyer situations.
Conventional loans are standard mortgages not backed by government agencies. They typically require higher credit scores (620 minimum, 740+ for best rates) and down payments ranging from 3% to 20% depending on the loan program.
These loans offer flexibility in property types and loan amounts, with conforming limits in Santa Clara County that accommodate various price ranges. Borrowers with less than 20% down pay private mortgage insurance until reaching 20% equity.
Rates vary by borrower profile and market conditions. Conventional loans work well for buyers with strong credit, stable income, and the ability to make a down payment.
VA loans serve veterans, active-duty military, reservists, and surviving spouses with a Certificate of Eligibility. The standout feature: zero down payment required, even on higher-priced Los Altos Hills homes.
These government-guaranteed loans eliminate private mortgage insurance entirely. Instead, borrowers pay a one-time funding fee (waived for disabled veterans) that can be rolled into the loan amount.
VA loans typically offer lower interest rates than conventional options and more flexible credit requirements. The VA guarantees a portion of the loan, reducing lender risk and passing savings to borrowers.
The most significant difference: VA loans require no down payment while conventional loans need 3-20%. For a Los Altos Hills property, this could mean $50,000 to $300,000 in upfront cash savings with a VA loan.
Mortgage insurance creates another major distinction. Conventional loans require monthly PMI payments until 20% equity, adding $100-300+ monthly. VA loans have no monthly insurance, just a one-time funding fee of 1.4-3.6% depending on service type and down payment.
Eligibility separates these options completely. Anyone meeting credit and income requirements can obtain conventional financing. VA loans exclusively serve those who have earned the benefit through military service.
If you qualify for a VA loan through military service, it usually provides superior financial terms. The zero-down option and absence of monthly mortgage insurance create substantial savings, especially on Los Altos Hills properties where even 5% down represents significant capital.
Conventional loans serve buyers without military eligibility or those who prefer certain property types. They also work well when you have substantial savings for a larger down payment, which can secure better rates and eliminate PMI immediately.
Consider your complete financial picture. VA loans excel when preserving cash for reserves, renovations, or investments. Conventional loans may suit buyers with strong credit seeking maximum property type flexibility or those ineligible for VA benefits.
VA loans work for primary residences meeting VA property standards. Most single-family homes qualify, but investment properties and some condos may not meet requirements.
Conventional loans typically require 620 minimum, with 740+ for best rates. VA loans often approve borrowers with 580-600 scores, though individual lenders set minimums.
First-time VA buyers pay 2.3% with zero down (1.65% with 5%+ down). The fee finances into your loan amount and disabled veterans receive a complete waiver.
PMI typically costs 0.5-1% of loan amount annually. On a $1 million loan with 10% down, expect $375-750 monthly until reaching 20% equity through payments or appreciation.
Yes, programs allow 3-5% down for qualified buyers. You'll pay PMI until reaching 20% equity, but the lower down payment makes homeownership accessible sooner.