Los Gatos Mortgage FAQ: Your Complete Guide to Home Financing in Santa Clara County

Minimum scores vary by loan type: FHA loans allow 580, conventional loans typically require 620, and jumbo loans often need 700 or higher. Higher scores generally secure better rates and terms.

Down payments range from 0% for VA and USDA loans to 3-5% for FHA and conventional loans. Jumbo loans typically require 10-20% depending on the loan amount and your financial profile.

Jumbo loans exceed conforming loan limits set by Fannie Mae and Freddie Mac. In Santa Clara County, loans above $1,149,825 require jumbo financing, common for many Los Gatos properties.

Yes, self-employed buyers have multiple options including bank statement loans, 1099 loans, and profit & loss statement loans. These programs use alternative income documentation beyond traditional W-2s.

Standard documents include two years of tax returns, recent pay stubs, bank statements, W-2s, and identification. Self-employed applicants may need business tax returns and additional financial documentation.

Typical closings take 30-45 days from application to funding. Timeline varies based on loan type, documentation complexity, and whether you're pre-approved before making an offer.

Pre-approval is strongly recommended for Los Gatos buyers. It demonstrates serious buyer status to sellers and helps you understand your budget in this competitive market.

Closing costs typically range from 2-5% of the purchase price. They include lender fees, title insurance, escrow fees, appraisal costs, and prepaid items like property taxes and insurance.

Private Mortgage Insurance protects lenders when down payments are below 20% on conventional loans. Avoid it by putting 20% down, using piggyback loans, or choosing lender-paid options.

FHA loans allow lower credit scores and down payments but require mortgage insurance for the loan life. Conventional loans offer more flexibility and lower costs for well-qualified buyers.

Active duty military, veterans, and eligible spouses qualify for VA loans with no down payment and no PMI. VA loans offer competitive rates and flexible qualification standards.

DSCR loans qualify investors based on rental property income rather than personal income. They're ideal for real estate investors purchasing rental properties in Los Gatos.

Yes, foreign nationals can purchase Los Gatos property using specialized foreign national loan programs. These typically require larger down payments and have specific documentation requirements.

ARMs offer lower initial rates that adjust periodically based on market indexes. They can be beneficial if you plan to sell or refinance before the adjustment period.

Discount points reduce your interest rate by prepaying interest at closing. They make sense if you plan to keep the loan long enough to recoup the upfront cost through savings.

Rate locks guarantee your interest rate for a specific period, typically 30-60 days. Lock when you're satisfied with the rate and have a purchase contract in place.

Bank statement loans qualify self-employed borrowers using 12-24 months of business or personal bank statements. They're ideal for business owners with significant write-offs or variable income.

Asset depletion loans qualify borrowers based on liquid assets rather than income. Retirees or investors with substantial savings but limited documented income often use these programs.

Bridge loans provide short-term financing to purchase a new home before selling your current one. They help competitive buyers make non-contingent offers in fast-moving markets.

A Home Equity Line of Credit lets you borrow against home equity as needed during a draw period. HELOCs offer flexible access to funds with interest charged only on amounts used.

Interest-only loans allow you to pay only interest for a set period, typically 5-10 years. They're popular with high-income earners seeking lower initial payments and maximum cash flow flexibility.

Recent bankruptcies, foreclosures, high debt-to-income ratios, and late payments can impact approval. Most issues have required waiting periods before you qualify for certain loan types.

Most lenders limit total debt payments to 43-50% of gross monthly income. Your maximum loan amount depends on income, debts, credit score, and specific loan program guidelines.

DTI compares monthly debt payments to gross monthly income. Lenders use it to assess your ability to manage payments. Lower ratios improve approval odds and access to better rates.

Yes, investment property loans are available through conventional financing, DSCR loans, and portfolio programs. Expect higher rates and larger down payments than primary residence loans.

Portfolio ARMs are adjustable rate mortgages held by lenders rather than sold to Fannie Mae or Freddie Mac. They offer flexibility for unique properties or borrower situations.

Most loan types require professional appraisals to confirm property value. Appraisals protect both lender and borrower by ensuring the home is worth the purchase price.

Low appraisals mean the lender won't finance the full purchase price. Options include negotiating price reductions, bringing extra cash, or canceling the contract if you have an appraisal contingency.

Yes, ITIN loans allow borrowers without Social Security numbers to qualify using Individual Taxpayer Identification Numbers. These programs serve non-citizens with US income and assets.

Construction loans provide funds to build or extensively renovate homes. They typically convert to permanent mortgages after construction completes and often require larger down payments.

First-time buyers can access FHA loans with 3.5% down, conventional loans with 3% down, and community mortgage programs. Some programs offer down payment assistance or reduced fees.

Title insurance protects against ownership disputes and property liens. Lenders require lender's title insurance, and buyers should purchase owner's coverage for complete protection.

Some FHA and VA loans are assumable, allowing qualified buyers to take over existing mortgages. Assumptions can offer below-market rates but require lender approval and qualification.

Prepayment penalties charge fees for paying off loans early. Most residential mortgages don't include them, but always confirm terms before committing to any loan program.

Fixed rates provide payment stability for the loan term. ARMs offer lower initial rates but adjust later. Choose based on how long you plan to keep the property and your risk tolerance.

Mortgage insurance protects lenders when borrowers make small down payments. FHA loans require it regardless of down payment; conventional loans need it below 20% down until you reach 20% equity.

Refinancing replaces your current mortgage with new terms, potentially lowering rates or accessing equity. You can refinance when it makes financial sense based on rates, equity, and your goals.

Escrow accounts hold funds for property taxes and insurance. Lenders collect monthly portions with your payment and pay these bills when due, ensuring timely payment of critical expenses.

Lenders review HOA finances and rules for condo or planned community purchases. HOA issues can delay closing or prevent approval if the association has financial problems or excessive rental units.

Lenders typically require two years of stable employment history. Gaps or job changes need explanation. Self-employed applicants must show consistent business income over similar timeframes.