San Jose Mortgage FAQs: Your Complete Guide to Home Financing in Santa Clara County

The average mortgage closing takes 30-45 days from application to funding. Complex loans or multiple-offer situations common in San Jose may extend this timeline. Pre-approval helps speed the process.

Minimum credit scores vary by loan type. FHA loans accept scores as low as 580, while conventional loans typically require 620 or higher. Better scores unlock lower rates and more options.

Down payments range from 3% to 20% depending on your loan program. FHA loans require 3.5%, conventional loans can start at 3%, and jumbo loans often need 10-20% down.

Standard documents include two years of tax returns, recent pay stubs, bank statements, photo ID, and employment verification. Self-employed buyers may need additional documentation depending on the loan type.

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

A 30-year mortgage offers lower monthly payments but higher total interest. A 15-year term builds equity faster with lower rates but requires higher payments. Your choice depends on budget and goals.

FHA loans require lower down payments and credit scores but include mortgage insurance premiums. Conventional loans offer more flexibility and can eliminate PMI sooner with 20% equity.

Private mortgage insurance applies when you put down less than 20% on a conventional loan. FHA loans require mortgage insurance regardless of down payment. PMI protects the lender, not you.

Jumbo loans exceed conforming loan limits set by federal agencies. Given San Jose's higher home prices, many buyers require jumbo financing. These loans typically need stronger credit and larger down payments.

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

Points are prepaid interest that reduce your mortgage rate. One point equals 1% of the loan amount. Buying points makes sense if you plan to keep the loan long enough to recoup the upfront cost.

Pre-approval involves submitting financial documentation to a lender who verifies your income, assets, and credit. You receive a letter stating your approved loan amount, strengthening your offer in competitive markets.

DSCR loans qualify investors based on property cash flow rather than personal income. The debt service coverage ratio compares rental income to mortgage payments. These work well for investment properties.

Veterans, active military, and eligible spouses can use VA loans with no down payment and no PMI. These government-backed loans offer competitive rates and flexible credit requirements for qualified borrowers.

ARMs start with a fixed rate for a set period, then adjust periodically based on market indices. Initial rates are typically lower than fixed mortgages. They work best for buyers planning to sell or refinance soon.

Lenders typically want your total debt payments below 43-50% of gross monthly income. Required income varies by loan amount, debts, and program. Rates vary by borrower profile and market conditions.

Bridge loans provide short-term financing to purchase a new home before selling your current one. They help buyers compete in fast-moving markets without a home-sale contingency.

Yes, ITIN loans allow borrowers without Social Security numbers to obtain financing. Requirements include stable employment history, proof of income, and adequate down payment.

Asset depletion loans qualify borrowers based on liquid assets rather than traditional income. Lenders calculate monthly income by dividing assets by the loan term, helpful for retirees or high-net-worth buyers.

Home inspections are highly recommended despite not being required by lenders. They reveal property condition issues that affect value and safety. Inspection costs typically range from $400-$600 in Santa Clara County.

A rate lock guarantees your interest rate for a specific period, typically 30-60 days. Lock when you're satisfied with the rate and confident you'll close within the lock period.

Yes, renovation loans like FHA 203(k) and construction loans allow you to finance both purchase and repairs. These programs require detailed contractor bids and property inspections.

Foreign national loans serve non-U.S. citizens and non-residents buying property in San Jose. Requirements include larger down payments, typically 30-40%, and proof of international income or assets.

Chapter 7 bankruptcy requires a 2-4 year waiting period depending on loan type. Chapter 13 may allow qualification after 12 months of payments. Credit rebuilding during the waiting period is essential.

Interest-only loans allow you to pay just interest for an initial period, typically 5-10 years, then principal and interest afterward. Monthly payments increase significantly when the interest-only period ends.

Yes, foreign investors can obtain financing through foreign national loan programs. These typically require 30-40% down and focus on property cash flow rather than personal income documentation.

A home equity line of credit lets you borrow against your home equity as needed. You draw funds during a period, typically 10 years, then repay. Interest rates are usually variable.

Reducing debt improves your debt-to-income ratio and can increase your buying power. Focus on high-interest debt first. Avoid closing credit cards, which can lower your credit score.

Bank statement loans qualify self-employed borrowers using 12-24 months of personal or business bank deposits instead of tax returns. Lenders calculate income from average monthly deposits.

You can typically refinance once you've closed, though some loans have prepayment penalties. Wait at least 6 months to build payment history. Refinancing makes sense when rates drop or equity increases.

Title insurance protects against ownership disputes, liens, and title defects. Lenders require a policy protecting their interest. An owner's policy, though optional, protects your equity investment.

Yes, FHA and conventional loans allow 2-4 unit purchases as primary residences with as little as 3.5% down. Rental income from other units can help you qualify for a larger loan.

A low appraisal means the property values below the purchase price. Options include renegotiating price, increasing your down payment, disputing the appraisal, or walking away if you have an appraisal contingency.

Reserve requirements vary by loan type and situation. Many programs require 2-6 months of mortgage payments in savings after closing. Jumbo loans and investment properties typically require larger reserves.

An escrow account holds funds for property taxes and homeowners insurance. Your lender collects 1/12 of annual costs monthly with your mortgage payment, then pays these bills when due.

Most loan programs allow gift funds from family members for down payment and closing costs. You'll need a gift letter stating the funds don't require repayment and documentation of the transfer.

Hard money loans are short-term, asset-based financing secured by property value. They work for fix-and-flip investors, quick closings, or borrowers who can't qualify for traditional financing.

Lenders prefer two years of steady employment in the same field. Job changes within your industry are usually acceptable. Recent graduates may qualify with shorter work history if it's in their degree field.

Don't open new credit accounts, make large purchases, change jobs, or move money between accounts without documentation. Lenders reverify credit and employment before closing. Maintain financial stability throughout the process.

Yes, investor loans, DSCR loans, and conventional investment property mortgages are available. Expect higher down payments of 15-25% and slightly higher rates compared to primary residence financing.