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California mortgage guides Learn it before you sign it

Plain-English mortgage guides for buyers, homeowners, veterans, business owners and agents, each linked to the official sources behind it.

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Search or filter by topic or loan type. Everything here is general education; ask us how it applies to your situation.

Topics
Programs

Points vs lender credits

Pay points for a lower rate or use a lender credit for lower closing costs? The break-even math, with a simple example.

ApprovalRefinance
Read guide

APR vs interest rate

Your interest rate sets principal and interest. APR includes certain fees. What APR leaves out, and why the holding period matters.

ApprovalRefinance
Read guide

Not sure where to start?

Pick the one that sounds like you.

Three things most people don't know

Full-file review

Approval isn't one number

Credit score, income, debts, savings and the property count together. A strength in one can offset a weakness in another, up to a point.

Program fit

Each loan solves a different problem

The right program depends on the obstacle: credit, cash for a down payment, loan size or the property itself. Compare the program with the problem.

Equity strategy

Cash-out isn't the only way to get cash

If your first mortgage has a low rate, a second mortgage or HELOC can leave it alone. Compare the cost of the new money with repricing the whole balance.

Which loans should you look at?

Answer a few questions and we'll highlight programs worth a closer look. It's a starting point, not an approval, denial, quote or ranking.

Five loan types at a glance

Conventional

Good for
Documented-income borrowers comparing primary homes, second homes or investment properties, and buyers weighing conventional PMI against government-loan fees.
Watch for
Pricing, PMI, loan limits, condo rules, reserves, and self-employed income treatment can change the outcome.
We'd compare
Fannie Mae vs Freddie Mac approvals (they can differ), PMI options, seller credits and loan size.

FHA

Good for
Buyers whose credit or down payment makes FHA worth comparing, with a property that meets FHA requirements.
Watch for
Upfront and annual MIP, how long it lasts, property condition and cash left after closing.
We'd compare
The same buyer and home with FHA MIP versus conventional PMI, including cash to close and long-term cost.

VA

Good for
Eligible veterans, service members and surviving spouses, especially with little cash for a down payment.
Watch for
Eligibility, entitlement, funding fee or exemption, occupancy, residual income, and VA property requirements.
We'd compare
Funding fee treatment, residual income, offer presentation, VA vs. conventional payment, and entitlement position.

USDA

Good for
May fit eligible primary-residence buyers in USDA-eligible rural or certain suburban areas who meet household income limits.
Watch for
The address has to qualify, household income has limits, and USDA review adds a step to plan for.
We'd compare
USDA against FHA and conventional using payment, fees, cash to close, timing, and eligibility certainty.

Jumbo

Good for
Purchases or refinances above the applicable county conforming limit.
Watch for
Every lender has its own rules, especially for savings in reserve and income documents.
We'd compare
Jumbo lenders, reserve requirements, ARM or fixed options, and whether a high-balance loan fits.

Refinance, cash-out, second or HELOC?

Got equity? Don't replace a good first mortgage by reflex.

Rate-term refinance

Good for
Changing the rate, term or mortgage insurance without taking significant cash out.
Watch for
Fees, the new payoff date, and whether a lower payment is actually a lower cost.

Cash-out refinance

Good for
Replacing the first mortgage with a larger loan and receiving cash from the difference.
Watch for
The new rate applies to the whole first mortgage, not just the cash you need.

Home-equity loan

Good for
A known lump sum with a fixed payment and payoff date, while keeping the first mortgage.
Watch for
Another payment and lien; the home is collateral and fees still matter.

HELOC

Good for
Drawing money over time for projects or changing borrowing needs.
Watch for
The rate and payment can change, and repayment after the draw period can cost more each month.

15-year, 30-year or ARM?

It's a cash-flow decision: payment comfort, how long you'll stay and how much risk you can accept.

30-year fixed

Good for
Payment flexibility, broad availability, and long-term rate stability.
Watch for
Usually more total interest than shorter terms if kept for the full amortization.

15-year fixed

Good for
Faster payoff for borrowers with enough cash flow and reserves.
Watch for
Higher required payment can reduce liquidity and borrowing flexibility.

ARM

Good for
A shorter expected hold period or a clear exit strategy.
Watch for
The interest rate and payment may increase after consummation. Understand adjustment caps, margin, index, and refinance risk before choosing it.

See the existing 15-year, 30-year and ARM comparison worked examples for full payment, APR and down-payment assumptions.

Mortgage words, decoded

LTV
Loan-to-value: the loan amount divided by the property value used for underwriting. A $400,000 loan on a $500,000 value is 80% LTV.
DTI
Debt-to-income: qualifying monthly debt payments divided by qualifying gross monthly income. A lender limit is not your household budget.
PMI / MIP
PMI is private mortgage insurance on certain conventional loans. MIP is FHA mortgage insurance. They protect the lender or insurance fund, and their cancellation rules differ.
Points
Upfront pricing paid for a lower rate. One point is 1% of the loan amount, not a fixed amount of rate reduction.
Escrow
In a purchase, escrow is the neutral closing process. An escrow or impound account with a mortgage holds money for items such as property taxes and insurance.
Conditions
The underwriter's list of items to resolve before the next approval or closing step, such as a missing record or repair evidence.
CTC
Clear to close: the lender has cleared the conditions needed to prepare closing. Signing, final checks and funding are still separate steps.
Rate lock
An agreement to hold specified loan pricing for a set period, subject to the lock's terms and accurate file details.
COE
Certificate of Eligibility: the VA record used to confirm benefit eligibility and entitlement. It is not approval of the mortgage.
IRRRL
Interest Rate Reduction Refinance Loan: a VA-to-VA refinance path to reduce payments or make the rate structure more stable, subject to its requirements.
Reserves
Eligible assets left after closing, often expressed as months of the housing payment. Cash to close and reserves are different buckets.

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Rates, terms, and eligibility depend on credit profile, income, property, loan program, occupancy, market conditions, and underwriting approval.

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