California Conventional Loans for Home Buyers

Conventional PMI cancels two ways. By law, the lender automatically drops PMI when your loan-to-value reaches 78 percent based on the original amortization schedule. You can also request removal once you reach 80 percent LTV — either through scheduled paydown, extra principal payments, or a new appraisal showing your home has appreciated. California home values often hit 80 percent LTV faster than the original schedule, so it is worth tracking.

Yes. On a primary residence, 100 percent of the down payment on a conventional loan can come from a gift — typically from a family member. The gift donor signs a gift letter confirming the funds are not a loan, and we document the transfer through bank statements. Second homes and investment properties have stricter rules, but primary residence gift funds are routine.

Yes, but the condo project itself has to be approved. Fannie Mae and Freddie Mac review HOA budgets, insurance, owner-occupancy ratios, and litigation status. Most established California condo projects are warrantable. Newer or smaller projects may need a limited or full project review. We pull the condo questionnaire upfront so there are no surprises before closing.

Yes. Second-home conventional loans typically require 10 percent down, a 680+ credit score, and proof the property is not used as a rental. Pricing is slightly higher than primary residence rates but well below investment property pricing. Common in California for vacation homes in Palm Springs, Big Bear, the Coast, and Tahoe.

Yes. Conventional investment property loans are widely available in California for 1–4 unit properties. Expect 15–25 percent down, a 680+ credit score, six months of reserves, and pricing roughly 0.5–1 percent above primary-residence rates. We can also count projected rental income from the subject property toward your debt-to-income ratio.

In high-cost California counties, conventional loans up to $1,209,750 are still conforming — they are called high-balance conforming loans. Fannie Mae and Freddie Mac buy them, so pricing is similar to standard conventional loans. Anything above the county limit becomes a jumbo loan with private investor underwriting and different guidelines.

Yes, most conventional loan servicers allow recasting once. After making a large principal payment — say from a bonus, equity from another sale, or a windfall — the servicer re-amortizes your loan over the remaining term at the same interest rate, lowering your monthly payment. There is usually a small fee. Recasting is a quiet but powerful tool for California buyers who close before another property sells.

Borrower-paid PMI (BPMI) is the default — you pay a monthly premium that drops off at 78–80 percent LTV. Lender-paid PMI (LPMI) bakes the cost into a slightly higher interest rate, so there is no separate PMI line item. LPMI does not cancel since the rate is fixed for the life of the loan. BPMI is usually the better long-term choice if you expect to reach 80 percent LTV in the next several years; LPMI can win for shorter holds. We run the math both ways.

FHA loans accept lower credit scores (580 with 3.5 percent down) and have looser DTI guidelines, but FHA mortgage insurance lasts the life of the loan unless you refinance, and there is an upfront 1.75 percent funding fee. Conventional loans require 620+ credit, but PMI cancels at 80 percent LTV with no upfront premium. For California buyers with credit in the high 600s and up, conventional is usually cheaper over the long run. FHA wins when credit is lower or when DTI is tight.