California Home Loan Programs

Finding the right California home loan program for your next home purchase or refinance is one of the most critical aspects of mortgage financing.

In California, there are many home loan program options available to borrowers. To ensure you are matched with the best possible home loan program, you should work with a mortgage company that can offer a wide variety of loan products.

Traditional California Home Loan Programs

Here are the six different traditional home loan programs we offer.

Conforming Home Loan Program

We offer a traditional Conforming home loan program both at the baseline loan limit and high-cost area limits. Conforming home loans offer a wide variety of options, including a small downpayment (as little as 3%).

Under most circumstances, our Conforming home loan programs offer a zero-point/zero-cost option (minimum loan amount is $275,000, primary or secondary residence).

FHA Home Loan Program

If you are a First-Time Homebuyer and/or have a small down payment, then the FHA home loan program might be a good fit for you.

And if you currently have an FHA loan, you might want to consider an FHA Streamline Refinance – one of the best refinance programs in the industry. No appraisal; close in two to three weeks with minimal effort. We offer a wide variety of options with our FHA home loan program in California.

VA Home Loan Program

If you served in the military, you have access to California’s VA home loan program. The VA home loan program is a great way to buy a home or refinance a current mortgage.

For those buying a home under the California VA home loan program, you can purchase a home with 0% down.

And for those that are refinancing a current mortgage, you might be eligible for the VA streamline refinance program. It’s super easy and super quick!

USDA Home Loan Program

What is a USDA home loan?

The United States Department of Agriculture (USDA) home loan program was created in 1949 to assist low to moderate-income homebuyers in rural America in purchasing homes. The program, also known as the USDA Rural Development Guaranteed Housing Loan Program, aims to stimulate economic development and improve the quality of life in rural communities.

The USDA home loan program is a government-backed mortgage offered by private home loan lenders and guaranteed by the USDA. It allows borrowers to purchase a home with no down payment and offers low-interest rates. The home loan program is available to low to moderate-income individuals and families who meet certain eligibility requirements, including income limits and location restrictions.

USDA Home Loan Program

The USDA home loan program is a primary source for homebuying and refinancing in rural America.

Jumbo Home Loan Program

As of 2023, most home loan amounts above $726,200 is considered a Jumbo loan (unless you live in a high-cost county and/or it’s a multi-unit property). If you live in a high-cost county like Los Angeles or Santa Clara county, then Fannie Mae and Freddie Mac offer a “high balance” loan program.

The maximum loan amount depends on the property’s county, and the rates are generally better than standard Jumbo rates. Both fixed and adjustable-rate programs are available.

For loan amounts above these limits, there is our flexible Jumbo home loan program. Our Jumbo home loan program allows for high loan amounts for both purchase and refinance transactions.

HELOCs and HELOANs

We offer HELOCs (Home Equity Line Of Credit) and HELOANs (Home Equity Loans). A HELOC is a line of credit you can draw from as you pay down your balance. A HELOAN is a fixed amount you borrow and usually comes with a fixed rate.

HELOCs generally offer lower payments since the payments are interest-only payments (you can pay more) for the first 5 – 10 years.

The great thing about these two programs is that it allows you to put less down and avoid Private Mortgage Insurance (PMI) or, in the case of FHA loans Mortgage Insurance (MI).

Specialized California Home Loan Programs

Below are some of the specialized home loan programs we offer.

Bank Statement Mortgage

A Bank Statement mortgage is a loan program that allows you to purchase a home or refinance a current mortgage using your bank statements to show your income (rather than tax returns or pay stubs). Here are the basic requirements for a Bank Statement Mortgage,

• Loan amounts from $250,000 to $2,500,000
• A middle credit score of 620 or higher
• No tax returns are needed under this program
• 10% down payment (or 10% equity for refinances)
• 12 or 24 months of business and personal bank statements
• Debt-To-Income (DTI) ratio below up to 50%
• Fixed and Adjustable rates are available
• There is an Interest Only option
• Purchase, Rate and Term Refinance, and Cash-Out Refinance
• Owner-occupied, second homes, and non-owner occupied properties
• Single Family Residences, Condominiums, Non-warrantable Condominiums, and Multi-Unit properties are eligible
• 1099 contractor option available

The Bank Statement Mortgage is an excellent home loan program for self-employed people who need to document their income in an alternative way.

HomePath – Fannie Mae

The Fannie Mae HomePath loan program allows a person to buy a Fannie Mae-owned property at unique terms. It’s a great loan program!

Generally, the process is a bit quicker since Fannie Mae waves specific requirements under the program. Excellent loan terms are available under the program; we currently offer this to all qualified applicants.

HomeReady – Fannie Mae

The HomeReady loan program from Fannie Mae is designed to help low-income borrowers get into a home with a minimal downpayment. The HomeReady program is an excellent tool for First-Time Homebuyers.

HomeStyle Energy Loan – Fannie Mae

The HomeStyle Energy home loan program is designed to help homeowners improve the energy efficiency of their homes. It also allows for improvements designed to protect the house in the event of a natural disaster.

HomeStyle Renovation – Fannie Mae

The Fannie Mae HomeStyle Renovation home loan program allows a homeowner to finance the cost of home renovations and improvements.

HomePossible – Freddie Mac

Home Possible is a Freddie Mac home loan program similar to the HomeReady program offered by Fannie Mae. The program is designed to help very-low and low-income borrowers with a small down payment into a home.

FHA 203(k) – home renovation loan

Are you buying a home that needs some work? Maybe it needs a new roof, updated flooring, etc. If so, then the FHA 203(k) might be a good fit for you.

You can also do the FHA 203(k) program for refinance transactions.

HARP Home Loan Program

This is a previous home loan program offered by mortgage giants Fannie Mae and Freddie Mac. The basic qualifications are that they must back your current loan (this can easily be checked online), and your existing loan must have closed in the first half of 2009.

Both fixed-rate and adjustable-rate mortgage programs are available. Primary and investment properties are eligible as well.

Fixed and Adjustable Rates

Under the various types of loan programs listed above, you have the option of locking in a fixed rate or an adjustable rate. Below we cover the similarities and differences between the two.

Fixed-Rate Home Loan Programs

The most conservative mortgage is a fixed-rate home loan, and borrowers have many options to choose from. The benefit of a fixed-rate home loan program is that your payment and rate will never change.

The rate is higher than an adjustable-rate mortgage, but with that higher rate comes more safety and security. The following are the length of mortgages loans with fixed rates:

• 10-year fixed-rate home loan
• 15-year fixed-rate home loan
• 20-year fixed-rate home loan
• 25-year fixed-rate home loan
• 30-year fixed-rate home loan

Some lenders offer an interest-only option (usually for ten years) on their 30-year fixed-rate loans. This means that for the first ten years, you’re only required to make an interest payment.

After ten years, your payment would adjust because you are now required to pay both interest and principal. When choosing which fixed-rate mortgage term would be best for you, consider your goals with the property.

Even if your goal is to pay off the house in fifteen years, you might want to choose a longer fixed-rate term. 15-year mortgages carry much higher payments; if you choose the longer term, you can always pay more towards your principal.

Adjustable-Rate Home Loan Programs

The critical point with an Adjustable-Rate Mortgage (ARM) is that at some point in time, that rate you have will adjust. Adjustable Rate Mortgages are short to medium-term solutions for home buyers or those looking to refinance their existing mortgage.

Most homeowners have either a 5 or 7-year fixed, adjustable rate mortgage. This means the loan rate will adjust higher after the 5th or 7th year.

Some adjustable rate mortgages are fixed for as little as one month all the way up to ten years, depending on the program. The key to obtaining an adjustable-rate mortgage program is deciding how long you need the loan.

For example, if you plan on moving in three to five years, you’ll want a 5-year fixed mortgage. If you’re taking cash out and doing a remodel for the next year or two, you might want to lock in the rate for seven years since you’ll be there a bit longer.

When these rates adjust, they will apply your margin (you always want to ask what your margin is) to whatever index the loan is based on (before 2021, it was usually LIBOR), and that will be your new rate.

Most adjustable are now based on the Secured Overnight Financing Rate (SOFR).

Most loans will only adjust a maximum for each adjustment and have a ceiling for how high the rate can go. Be prepared! Be prepared to refinance your mortgage after it adjusts or sells the property, so you do not have to pay the higher interest rate.

Ask questions and make sure you understand your loan before signing loan documents. Always ask these three questions:

1. How long is the loan fixed for, and does that match my needs?
2. What margin will the bank apply to the loan after it adjusts?
3. What is the index the loan is based on?

Knowing the answers will prepare you better for an adjustable-rate mortgage.

Cash-Out Home Loans In California

There are two main types of cash-out home loans. Cash-out for home improvements and cash-out for debt consolidation.

Cash-Out For Home Improvements

If you would like to update the kitchen or perhaps the master bath, consider a Home Improvement Loan. Depending on the current loan balance and the property’s value, you may obtain additional money to update the home.

But let’s say you are doing a massive remodel to the home, basically changing everything…how much can you borrow? Depending on the project, current loan balance, and appraised value, you could obtain $200,000, $400,000 (or more) for your next major home improvement project. Always be sure to obtain the proper permits on any home improvement project.

Cash-Out For Debt Consolidation

Do you have a lot of debt and want to lower your overall monthly debt payment possibly? One of our debt consolidation home loan programs might be the answer. You can combine your credit cards, car loans, home equity lines of credit, and other forms of debt into your 1st mortgage.

And if you have a 2nd mortgage, you might be able to combine that with your first mortgage.

Many homeowners find they not only lower the interest they’re paying on their non-secured debt but also find they drastically reduce their overall monthly debt payment. Debt consolidation guidelines for various home loan programs in California differ from one program to the next.

Speak with your Loan Officer to get the latest information on consolidating your debt into a new mortgage.

Home Loan Programs FAQs

Here are the answers to some of the frequently asked questions we receive about our home loan programs.

What is an Interest Only Home Loan Program?

The Interest Only home loan program provides the same features as fixed and variable rate programs and offers a lower payment option. With an interest-only loan payment option, you pay only the interest portion of the payment but no principal.

Home Loan Tip: When deciding if you should obtain an interest-only payment option on your next home loan, determine what your short-term and long-term goals are for the property.  Having a clear understanding of what you wish to accomplish with the property is an important factor when deciding if you should obtain an interest-only home loan.

What Is A Fully Amortized Note?

Home loan programs have an important document that is included with your final closing documents.

A fully amortized note is the most common type of loan with institutional lenders. Interest is charged on the outstanding principal balance (original loan amount plus any loan costs that the borrower wants to add instead of paying them at the time of funding the loan) at the rate and term agreed upon by the lender and borrower.

After the interest is calculated for the term of the loan and added to the principal to obtain the amount to be amortized, payments are determined by dividing that amount (principal plus interest) by the number of payments in the term of the loan. Regular periodic payments of both interest and principal are made, which pays off the debt completely by the end of the term.

A common type of fully amortized note is a fixed loan. These loans are available for 30 years, 20 years, 15 years, and even 10 years. There are also bi-weekly mortgages, which shorten the loan by allowing for half the monthly payment every two weeks.

Fixed-rate mortgages and fully amortizing home loans have two distinct features. First, the interest rate remains fixed for the life of the loan. Secondly, the payments remain level for the life of the home loan and are structured to repay the loan by the end of the loan term. The most common fixed-rate loans are 15-year and 30-year loans.

During the early amortization period, a large percentage of the monthly payment is used for paying the interest. As the loan is paid down, more of the monthly payment is applied to the principal. A typical 30-year, fixed-rate mortgage takes 22.5 years of level payments to pay half the original loan amount.

What is an Impound Account?

Nearly every home loan program in California offers the opportunity to set up an impound account.

If you would like to pay monthly towards your property taxes and insurance, you can set up an impound account with the lender to handle the payments when they’re due. It does not cost you anything to set up an impound account, and many homeowners find it beneficial to have one.

So instead of the annual bill, you usually would get from the county or your insurance agency, you will pay monthly into the account set up by the lender to have them pay these bills for you.

Do Home Loan Programs Have Pre-Payment Penalties?

Most don’t, but some do. Conforming home loans and the three main government-backed home loan programs (FHA, VA, and USDA) do not have pre-payment penalties.

But some Bank Statement Mortgage programs have a one to three-year pre-payment penalty. Also, a few Jumbo mortgage programs have them as well. Whenever you apply for a home loan, you should ask, “does this have a pre-payment penalty?”

This way you know for sure before getting too deep into the process.

We Are Your California Home Loan Partner

When you work with JB Mortgage Capital Inc., you’ll find our experience and service are second to none. We work hard to find our clients the best home loan programs in California.

We never charge junk fees, and there are no surprises at closing. Once we lock in terms, we guarantee your loan will close exactly as quoted. We not only value your time, but we also value your trust, and that is why the Better Business Bureau gave us an “A+” rating and the Business Consumers Alliance gave us a “AAA” rating (their highest).