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in Los Gatos, CA
Los Gatos is one of the most expensive markets in Santa Clara County. Choosing the right loan structure here can mean the difference between a deal and a dead end.
Conventional and FHA loans are the two most common options. They serve different borrower profiles and carry very different costs at these price points.
Conventional loans are not government-backed. That means stricter qualification standards — but also no upfront mortgage insurance premium and cheaper long-term costs.
In Los Gatos, conventional financing is the dominant choice. Strong W-2 income and reserves are the norm here, and most buyers qualify.
FHA loans are backed by the federal government. They allow credit scores down to 580 with just 3.5% down — a real opening for buyers who haven't built perfect credit.
The catch: FHA charges mortgage insurance for the life of the loan in most cases. On a high-value Los Gatos property, that adds up fast.
The biggest difference is mortgage insurance. Conventional PMI can be removed once you hit 20% equity. FHA MIP typically stays for the loan's full term.
HousingWire flagged the 30-year fixed hitting 6.57% with applications dropping sharply. At that rate, the cost gap between FHA MIP and conventional PMI matters even more. Rates vary by borrower profile and market conditions.
Credit requirements also diverge. Conventional loans price risk through your rate — better credit gets a better rate. FHA is more forgiving but charges everyone similar insurance costs.
Pick conventional if your credit is above 700 and you have at least 5% down. The long-term cost is lower and you will not be stuck paying insurance forever.
FHA makes sense if your credit score is in the 580–660 range or you have limited reserves. Just model out that lifetime MIP against your expected hold period before committing.
Both conventional conforming and FHA share a limit of $1,249,125 in Santa Clara County. Anything above that requires a jumbo loan.
On most FHA loans originated after 2013, MIP stays for the loan's full term. The only exit is refinancing into a conventional loan.
Most conventional lenders want at least 620. But in Los Gatos price ranges, you want 700+ to get competitive rates.
Technically yes — FHA allows it at 580+ credit. But seller perception in this market strongly favors larger down payments.
It depends on your credit score and down payment. Conventional is usually cheaper monthly once you cross 700 credit and 10% down.
Only if the condo complex is FHA-approved. That approval list is limited — confirm eligibility before you write an offer.