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FHA Loans in Capitola
Capitola's coastal location makes it one of Santa Cruz County's pricier markets. FHA loans bridge the gap for buyers who can afford monthly payments but lack 20% down.
The 3.5% down payment option opens doors that conventional financing keeps locked. Most Capitola buyers using FHA are first-timers or trading up from rentals.
Beach proximity drives prices higher than inland Santa Cruz County areas. FHA's loan limits accommodate most Capitola properties, though some oceanfront homes exceed the ceiling.
You need 580 minimum credit score for 3.5% down. Scores between 500-579 require 10% down, though most lenders won't touch that tier.
Debt-to-income ratio can stretch to 50% with strong compensating factors. We've closed Capitola deals at 49% DTI when credit and reserves looked solid.
FHA allows recent bankruptcies and foreclosures after waiting periods. Two years post-Chapter 7, three years post-foreclosure with clean credit rebuilding.
Not all lenders price FHA the same in Capitola. We shop 200+ wholesale lenders because rate differences of 0.375% are common on identical scenarios.
Some lenders overlay tighter rules than FHA requires. One might cap DTI at 45% while another goes to 50%. Credit overlays vary even more.
Condos in Capitola require FHA approval of the entire complex. Many beachfront buildings aren't approved, killing deals before they start. We verify this before you write offers.
FHA mortgage insurance costs more than conventional PMI and never drops off. You pay 1.75% upfront plus 0.55%-0.85% annually for the loan's life.
Refinancing to conventional once you hit 20% equity eliminates that monthly MI payment. Most Capitola buyers do this within five years as property values climb.
Sellers sometimes resist FHA offers, worried about appraisal issues. The appraisal is stricter than conventional, but we prep sellers upfront so deals don't crater.
Conventional loans beat FHA if you have 5-10% down and 720+ credit. The MI costs less and drops off at 78% loan-to-value.
VA loans crush FHA for veterans with zero down and no monthly MI. If you qualify for VA, use it instead—no contest.
USDA doesn't work in Capitola since coastal Santa Cruz County isn't rural enough. FHA fills that gap for low-down-payment buyers here.
Capitola Village properties built pre-1978 trigger lead paint inspections. FHA requires repairs if inspectors find issues, adding costs sellers don't always expect.
Flood zones affect some Capitola areas near the Soquel Creek. FHA requires flood insurance, which can add $1,200-$3,000 annually to housing costs.
Multi-unit properties work with FHA if you occupy one unit. This is huge in Capitola where duplexes let you live in one unit while rent covers most of your payment.
Santa Cruz County's FHA limit is $766,550 for single-family homes in 2024. Most Capitola properties fit under this ceiling, though beachfront homes often exceed it.
Only if the condo complex is FHA-approved, which many aren't. We check approval status before you make an offer to avoid wasted time and inspection fees.
Expect 2-4% of the purchase price. Sellers can contribute up to 6% toward your costs, which helps offset the 1.75% upfront mortgage insurance premium.
Most do, especially in balanced markets. Cash-heavy competition can make it harder, but strong pre-approval and clean financing overcome seller resistance.
FHA 203(k) loans finance purchase plus repairs in one loan. This works well for older Capitola homes needing updates but priced below renovated comps.
Most lenders want 600+ despite FHA's 580 minimum. Below 600, your options shrink and rates climb, but approvals still happen with strong income and reserves.
Mortgage financing for independent contractors and freelancers who earn 1099 income instead of traditional W-2 wages.
Mortgage programs that allow borrowers to qualify based on liquid assets rather than traditional employment income.
Non-QM loans that use 12 to 24 months of bank statements to verify income for self-employed borrowers.
Short-term financing that bridges the gap between buying a new property and selling an existing one.
Debt Service Coverage Ratio loans that qualify investors based on a rental property's income rather than personal income.
Mortgage programs designed for non-US citizens and non-permanent residents who want to purchase property in the United States.
Asset-based short-term loans primarily used by real estate investors for property acquisition and renovation projects.
Mortgages that allow borrowers to pay only the interest for an initial period, resulting in lower monthly payments upfront.
Financing solutions tailored for real estate investors purchasing rental properties, fix-and-flip projects, or investment portfolios.
Home loans for borrowers who have an Individual Taxpayer Identification Number instead of a Social Security number.
Adjustable rate mortgages held in a lender's portfolio rather than sold on the secondary market, offering more flexible terms.
Non-QM mortgages that use a CPA-prepared profit and loss statement to verify income for self-employed borrowers.
Home loans with interest rates that adjust periodically based on market conditions after an initial fixed-rate period.
Specialized mortgage programs designed to support homeownership in underserved communities with flexible qualification criteria.
Mortgages that meet the guidelines and loan limits set by Fannie Mae and Freddie Mac for secondary market purchase.
Financing for building a new home or making major renovations, typically converting to a permanent mortgage upon completion.
Traditional mortgage financing not backed by a government agency, offering flexible terms and competitive rates for qualified borrowers.
Innovative loan products that leverage projected home equity growth to provide favorable financing terms.
A revolving line of credit secured by your home equity that allows you to borrow funds as needed during a draw period.
A fixed-rate second mortgage that provides a lump sum of cash by borrowing against the equity built in your home.
Mortgages that exceed the conforming loan limits set by the FHFA, designed for financing high-value luxury properties.
Loans for homeowners aged 62 and older that convert home equity into cash without requiring monthly mortgage payments.
Government-backed zero down payment mortgages for eligible rural and suburban homebuyers who meet income limits.
Government-guaranteed mortgages for eligible veterans, active-duty service members, and surviving spouses with zero down payment.