Financing your home
Loan types, down-payment options, and the pre-approval process — what every Orange County, California buyer should know before starting.
Loan types
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Conventional
The most common option. Typically 5–20% down. Best terms for buyers with strong credit and steady income.
- Pros:
- Flexible terms, no upfront mortgage insurance with 20%+ down.
- Cons:
- Stricter credit requirements than government-backed loans.
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FHA
Federal Housing Administration loan. As little as 3.5% down with a credit score of 580+. Good entry point for first-time buyers.
- Pros:
- Lower down payment, more forgiving credit requirements.
- Cons:
- Mortgage insurance for the life of the loan in most cases.
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VA
For active-duty military, veterans, and qualifying spouses. 0% down. No private mortgage insurance.
- Pros:
- Best terms available — zero down, no PMI, competitive rates.
- Cons:
- Only available to those who qualify; one-time funding fee applies.
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Jumbo
For loan amounts above conforming limits — common in coastal Orange County's higher price brackets.
- Pros:
- Required for many OC purchases above $766k+ (limit varies by year).
- Cons:
- Tighter credit requirements, larger down payment expected.
Down payment
Down payments range from 0% (VA loans) to 20%+ for the strongest conventional terms. Coastal Orange County's higher prices mean the dollar amount feels large even at low percentages — plan early.
California first-time buyer programs (CalHFA MyHome, CalPLUS) can contribute toward down-payment and closing costs for qualifying buyers. Eligibility depends on income, location, and the specific program.
Gift funds from family are allowed by most loan programs. The lender will need a "gift letter" documenting that the funds aren't a loan and don't have to be repaid.
Pre-approval
Pre-approval is a written estimate from a lender of how much you can borrow, based on a review of your income, assets, debts, and credit. In Orange County, sellers rarely accept offers without a current pre-approval letter attached.
The process takes 1–3 business days once you provide the documents (pay stubs, tax returns, asset statements). Pre-approval is good for 60–90 days — you can refresh it without much hassle if needed.
Pre-approval ≠ guaranteed loan. Final approval happens after you're under contract, when the lender verifies the appraisal and underwrites the file.
Common questions
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How much should I have saved before starting?
A common rule of thumb: down payment + 1–2% of the price for closing costs + 1–2 months of housing payments as a reserve. For a $1M home with 20% down, that's roughly $230k–$240k in liquid funds.
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How is the down payment different from earnest money?
Earnest money is a small deposit (typically 1–3% of price) you put up when an offer is accepted, held in escrow as a good-faith commitment. It's credited toward your down payment at closing.
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Should I lock my rate?
Once you're under contract, most buyers lock the rate within a few days. Locks typically last 30–60 days. Your lender will recommend timing based on rate trends and your closing date.
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What's PMI and when do I pay it?
Private Mortgage Insurance — required by lenders when your down payment is less than 20% on a conventional loan. It runs about 0.5–1.5% of the loan annually until you reach 22% equity, when it auto-cancels.
Need a lender introduction?
I work with lenders across Orange County who specialize in different loan types and buyer profiles. Happy to make introductions.