Mortgage Rates California

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    Mortgage Rates California: Getting Lower Your Rates For Your Dream Home

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    Buying a home in the Golden State of California is an aspiration for many people. As the country’s most populous state, California also has a very large mortgage market – however, it’s also very competitive and homes are often sold very quickly. 

    To prepare for your dream California home, you need to know the most current mortgage and refinance rates.  In this guide, we’ll share the most current mortgage rates in California and essential home buying advice. 

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    Mortgage Options In California 

    In the US, homebuyers have access to three major kinds of mortgage loan types, each with its own rates, APR, and terms:

    Conventional Mortgage

    Conventional mortgages are home purchase loans offered by private lenders. These mortgages are protected by guarantor companies Fannie Mae & Freddie Mac and have limits set by the Federal Housing Finance Agency.

    While the national average limit is $548,250, some areas of California have higher limits due to higher home prices. Several counties like Alameda, San Mateo, and Los Angeles have mortgage loan limits that can go up to $822,375.

    Fixed-Rate Mortgage

    Fixed-rate mortgages are popular with first-time homebuyers because of their predictability. This loan type offers a constant interest rate & APR for its entire life, which means that your monthly payment amount will remain the same for the loan’s entire life. 

    Fixed-rate mortgages are commonly issued in 30-year terms, although 15-year and 20-year terms are also widely available.

    Adjustable-Rate Mortgage (ARM)

    Adjustable-rate mortgages come with variable interest rates. The ARM rate & APR is usually lower during its initial fixed-rate period, which makes them popular with people who want short-term savings. 

    The initial fixed mortgage rate period on an ARM is usually designated on its name. A 5/1 ARM, for example, has five years of fixed interest rate & APR before rates start adjusting annually. Most ARM loans come in 5/1, 7/1, and 10/1 terms.

    Jumbo Mortgage

    Homes in the State of California can be expensive and may even exceed FHFA-set loan limits. To help borrowers buy high-value homes, lenders offer what’s called jumbo mortgages. However, there’s a trade-off – although they allow you to borrow over local limits, the jumbo mortgage rate & APR are higher than conforming home loans. This is because lenders take on more risk providing this loan. 

    Government-Backed Mortgages

    Several departments of the United States government offer loan programs that feature relaxed qualification requirements and a lower interest rate. The three major government loan programs are:

    • FHA loan: Geared toward low-income borrowers, an FHA loan has lower credit score requirements and affordable rates. However, borrowers have to pay for private mortgage insurance (PMI) for the entire loan.
    • USDA loan: These zero-down loans are designed to stimulate rural housing development. If you buy a home with a USDA loan, you’ll have lower PMI fees compared to an FHA loan, but you need to purchase property in an eligible area.
    • VA loan: These loans are the best option if you’re a current or former military member as VA loans have no down payment requirement and no PMI fees. However, you need to pay funding fees to replace PMI.

    Mortgage Refinancing

    A mortgage refinance helps you get a better rate on existing loans or convert home equity into cash. There are two types of refinances:

    • Rate and term refinance: This refinance type allows you to change the length or type of your mortgage. Rate and term refis are typically used to get better refinance rates or shorten the loan so you can pay it off faster at a lower rate.
    • Cash-out refinance: You can take a cash-out refi to leverage your home equity. In this type of refinancing, you take out a loan that’s larger than your current mortgage balance. After paying your existing mortgage off, the leftover cash can be used for other purposes.
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    Current California Mortgage Rates

    Traditionally, rates & APR in California are on par or slightly below national average mortgage rates. We’ve  provided insider access to the latest California mortgage rates in this table:

    The rate & APR data are taken from America’s major mortgage companies. We update the rates on this table daily! Keep in mind that the listed rate & APR information may vary depending on your credit rating. Rates may also change without prior notice.

    Today’s Mortgage Rates In California

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    We also have a mortgage tool at the top of this page. Enter your basic details and financial information to get a personalized California mortgage rate & APR estimate just for you!

    First-Time Homebuyer Programs In California 

    To help prospective residents, the Golden State offers several loan programs for first-time home buyers. 

    CalHFA and CalPLUS conventional and FHA loans are administered through the California Housing Finance Agency (CalHFA). They also offer two down payment assistance programs that can be combined with CalHFA loans.

    To qualify for California mortgage programs, the borrower must:

    • Purchase property in the California area to be their primary residence until it’s sold or refinanced
    • Be a U.S. citizen, permanent resident, or qualified alien
    • Have a credit score of 660 and above
    • Meet CalHFA’s income limits
    • Complete a mandatory homebuyer education course

    CalHFA MyHome Assistance

    This program provides borrowers with a subordinate loan to cover down payment, closing cost, and lender fees. This loan is, on average, worth 3.5% of the home price. Payment can be deferred until the home is sold or refinanced. 

    CalHFA Zero Interest Program (ZIP)

    If you have a CalPLUS loan, combining it with a ZIP can make your purchase more affordable. The ZIP offers down payment and closing cost assistance in the form of a no-interest second loan, valued up to 3% of your California mortgage. Similar to the MyHome loan, you can defer payment on a ZIP loan until your home is sold or refinanced.

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    Buying A Home In California  

    For first-time borrowers, knowing how to buy a home is as important as knowing what loan to get. To make the process easier,  here are the six steps you should follow to buy your dream California home:

    Step 1: Check Your Financial Fitness

    Before filling out mortgage applications, make sure you can afford a mortgage. To avoid stretching your finances too thin, keep your housing costs at around 25% of your monthly income.

    Step 2: Get A Preapproval

    Once you have a mortgage ceiling in mind, you need to get pre-approved by a loan officer. A preapproval can be one of your best bargaining chips while house hunting – this document tells the seller that you’re serious about buying the home and are financially able to do so.

    Pre-approval starts when you apply for a loan. Lenders will examine your financial health – if you’re deemed financially capable, your mortgage loan officer will give you a preapproval letter.

    Step 3: Enlist A Real Estate Agent

    A real estate agent’s experience is almost indispensable when buying a home. Good local real estate agents can help you answer questions about your prospective zip code: public amenities, average property value, commute time, and more. Your real estate agent can also help you throughout the home purchase process.

    Step 4: Start House Hunting

    Your house hunt should start with the neighborhood. Find a neighborhood that you like and search for affordable homes there. Try not to exceed your home price ceiling – if you do, you may be saddled with a more expensive monthly payment. 

    Keep in mind that your closing cost and lender fees can add 2-5% to the home’s value. You should also take PMI fees into account if you plan on paying less than 20% down. If your mortgage has any property type requirements, be sure to follow them.

    Step 5: Make An Offer

    Homes in California move fast – you usually have 40 days before a home gets bought. Because you’re likely not the only prospective buyer, you need to sweeten the deal for the seller if you want to secure a home. Offering above the property value or putting down a larger deposit can help your offer stand out.

    Step 6: Prepare For Closing

    If the seller agrees to your bid, you’ll be given paperwork to sign. Be sure to lock your mortgage rates with the lender and read over the contract thoroughly with a lawyer. Once all the paperwork is done, you can schedule your closing!

    How To Get Better Interest Rates 

    Affordable mortgage rates keep you from breaking your bank. Here’s some advice on how to drive your rate down:

    Purchase Discount Points

    Discount points lower your mortgage interest rate & APR in exchange for an upfront payment. If you’re planning to keep your loan for its entire life, points can be a great way to save. 

    Typically, discount points are worth one percent of the loan each and reduce your rate by 0.25%. If you buy 2 points on a $400,000 loan with 5% interest, you’ll have to pay $8,000 to drive your rate down to 4.5%.  

    The good news is that you don’t need to pay for whole discount points – if you can’t afford a point, you can buy half-points instead. 

    Shorten Your Loan

    If you can afford the increased monthly payments, consider shortening your loan. Because you’re making fewer payments at a lower interest rate & APR, you’ll spend much less on interest compared to longer home loans.

    Compare Offers From Lenders

    Mortgage lenders are always competing for your business, which is why many offer attractive benefits like a lower rate or down payment assistance. To ensure you’re finding the best rate & APR, compare loan estimates from multiple lenders to see which one fits your situation best. An independent mortgage broker can also help in your search for the best loan offer. 

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    Closing Thoughts 

    Housing in California can be expensive, but it doesn’t have to be unaffordable. There are many mortgage alternatives and assistance programs you can take advantage of to finance your dream home.

    Planning to buy a home in California? Wesley LLC is here to help! Our team of financial professionals will find the mortgage that best fits your needs. Contact us today for more information!

    Written By Ed Wallace
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