Loan Programs Explained | Santa Clarita & San Fernando Valley

Conventional loans

A conventional loan is any mortgage not backed by a government agency. Most are conforming, meaning they meet Fannie Mae and Freddie Mac rules, including a maximum loan amount that changes each year and varies by county.

2026 conforming limits where I work

This is genuinely good news for Valley buyers: both counties I serve sit at the national ceiling. The limit is as high as it gets anywhere in the country, which keeps most purchases here inside conforming territory.

One-unit limits for 2026. Two-, three-, and four-unit properties have higher limits.
County	Covers	2026 limit
Los Angeles	Santa Clarita Valley, San Fernando Valley, Burbank, Glendale, Antelope Valley	$1,249,125
Ventura	Simi Valley, Moorpark, Thousand Oaks	$1,249,125
National baseline	Most of the country, for comparison	$832,750

What it takes

Down payment: 3% is possible through Fannie Mae's HomeReady, Freddie Mac's Home Possible, or Conventional 97. 5% is more common. 20% avoids mortgage insurance entirely.
Credit: 620 is the usual floor, but pricing improves sharply at 680, 720, and 740. The jump from 679 to 680 can be worth real money every month.
Mortgage insurance: required under 20% equity, and here is the advantage, it goes away. Request removal at 20% equity, and it drops automatically at 22%.

The one thing that makes conventional loans worth a look

Mortgage insurance is temporary. On an FHA loan taken with the minimum down payment, the mortgage insurance premium lasts the life of the loan. Over thirty years that gap can total tens of thousands of dollars, which is why buyers with decent credit should always price both.

FHA loans

Insured by the Federal Housing Administration and built for buyers with thinner credit or smaller savings. FHA is the most forgiving mainstream option, and that forgiveness has a price.

Down payment: 3.5% with a credit score of 580 or higher. Scores between 500 and 579 require 10% down.
Credit: more tolerant of past collections, medical debt, and a short credit history than conventional underwriting.
Debt-to-income: often approved higher than conventional, which matters in expensive markets.
Mortgage insurance: an upfront premium of 1.75% of the loan (usually financed into the balance) plus an annual premium. With the minimum down payment that annual premium stays for the life of the loan, removing it means refinancing.
Property condition: FHA appraisals have minimum standards. Fixer-uppers with peeling paint, broken windows, or roof problems can fail, which makes FHA offers harder in competitive situations.

2026 FHA limits where I work

One-unit FHA limits for 2026. Both counties sit at the national ceiling.
County	2026 FHA limit
Los Angeles	$1,249,125
Ventura	$1,249,125

A local advantage worth understanding

In most of the country, FHA caps out far below the conforming limit, which pushes buyers off FHA well before they reach the top of the market. Here, the FHA limit and the conforming limit are the same number.

That means FHA stays available at almost any price point in Santa Clarita, Granada Hills, Northridge, Burbank, or Simi Valley, so a buyer with 3.5% down and a 580 score is not shut out of ordinary Valley homes. In counties with lower FHA ceilings, that same buyer would be.

VA loans

If you have qualifying military service, this is usually the strongest loan available to anyone, anywhere. Eligible borrowers who default to FHA out of habit are leaving money behind.

Down payment: none required.
Mortgage insurance: none, ever. There is a one-time funding fee instead, which varies with your down payment and whether you have used the benefit before.
Funding fee waived: for veterans receiving VA compensation for a service-connected disability, and for some surviving spouses.
Rates: typically among the lowest on the market.
Reusable: this is not a once-in-a-lifetime benefit. Entitlement can be restored and used again.
Occupancy: must be your primary residence, not a rental or vacation home.

Worth checking even if you think you don't qualify

Eligibility reaches further than most people assume: National Guard and Reserve service can count, and surviving spouses of service members who died in service or from a service-connected disability may be eligible. A Certificate of Eligibility is free to request.

USDA loans

Zero down payment, backed by the U.S. Department of Agriculture. The catch is geography and income, but "rural" is drawn more generously than the name suggests.

Down payment: none required.
Location: the property must sit in a USDA-eligible area. That rules out the Valley and Santa Clarita proper, but outlying communities on our northern edge, Acton, Agua Dulce, Lake Hughes, and parts of the Antelope Valley, can qualify. Check the exact address against the USDA map, because eligibility is drawn parcel by parcel and a street can be split down the middle.
Income: household income caps apply and vary by county and household size. This is a program for moderate incomes, not high ones.
Fees: an upfront guarantee fee plus a smaller annual fee, generally cheaper than FHA mortgage insurance.

Jumbo loans

Any loan above your county's conforming limit, here, that means borrowing more than $1,249,125. Most purchases in Santa Clarita, Granada Hills, Northridge, Reseda, or Simi Valley stay below that line. Jumbo territory tends to mean Sherman Oaks, Encino, Studio City, Toluca Lake, Calabasas, Hidden Hills, and the hillside streets above Burbank and Glendale, common purchases here, not exotic ones.

Down payment: usually 10–20%, sometimes more above $2 million.
Credit: 700+ is typical, and 740+ gets the best pricing.
Reserves: expect to document several months, sometimes twelve, of payments left in the bank after closing. This surprises people more than the down payment does.
Documentation: heavier. Two years of returns, full asset sourcing, and often a second appraisal.

A planning move worth knowing

If your purchase lands just over the conforming limit, increasing your down payment enough to drop the loan under that line can improve your rate and simplify underwriting. On a borderline purchase, running both versions side by side is always worth the hour.

If you're self-employed

Business owners, contractors, and commission earners write off expenses to lower taxable income, and then that lower income is what a lender sees. Strong businesses get declined for exactly this reason.

Bank statement loans

Income is calculated from 12 or 24 months of business bank deposits instead of tax returns. Expect a higher rate and a larger down payment, typically 10–20%. For a profitable business with aggressive write-offs, this is often the only realistic path.

Other non-QM options

Profit & loss loans: qualified from a CPA-prepared P&L statement.
Asset depletion: large liquid assets converted into a qualifying income stream.
DSCR loans: for investment property, qualified on the rent the property brings in rather than your personal income.

Two years of planning beats any loan program

Lenders average your last two years of income. If you know you want to buy, talk to your CPA and your loan officer together two tax years out. Easing off write-offs for one or two years can qualify you for a conventional loan and save far more in interest than the deductions saved in tax.

Fixed rate vs. adjustable rate

A fixed-rate mortgage keeps the same interest rate for the whole term. Your principal and interest payment never changes, which makes planning simple.

An adjustable-rate mortgage (ARM) starts lower for a fixed intro period, a 7/6 ARM holds its rate for seven years, then adjusts every six months within set caps.

The honest rule: an ARM makes sense when you are genuinely confident you will sell or refinance before the fixed period ends. If that confidence rests on rates falling, take the fixed rate. Nobody reliably predicts rates, and you have to live in the payment either way.

Side-by-side

General guidelines for 2026. Individual lenders set stricter or looser overlays, so treat these as a starting point.
Program	Min. down	Typical credit	Mortgage insurance	Best for
Conventional	3%	620+	Removable at 20% equity	Decent credit, wants MI to end
FHA	3.5%	580+	Life of loan at min. down	Thinner credit or higher debt load
VA	0%	Varies by lender	None, ever	Qualifying military service
USDA	0%	640+ typical	Guarantee + annual fee	Eligible areas, moderate income
Jumbo	10–20%	700+	Varies; often none	Above the county limit
Bank statement	10–20%	660+ typical	Varies	Self-employed with write-offs

What lenders actually look at

Credit score

Mortgage lenders pull all three bureaus and use the middle score, not the best or the average. If two borrowers are on the loan, the lower of the two middle scores usually drives pricing.

Debt-to-income ratio

Your monthly debt payments divided by gross monthly income. Lenders look at the new housing payment, principal, interest, taxes, insurance, HOA, and any Mello-Roos, plus car loans, student loans, credit card minimums, and child support. Groceries, utilities, and phone bills are not counted. Many programs stretch to 45–50% with other strengths, but the lower your ratio, the more options you have.

Cash to close

Your down payment plus closing costs, which in California typically run 2–5% of the purchase price for a buyer. Money must be sourced and seasoned: a large unexplained deposit will be questioned, and a gift needs a signed gift letter. Plan this at least 60 days ahead.

Employment history

Two years in the same field is the benchmark. Job changes within the same industry are generally fine, and a new graduate entering their field can often use an offer letter. A career change into a new field or a move to commission-only income is where timing matters most.

Pre-qualified vs. pre-approved

A pre-qualification is an estimate based on numbers you state. Nothing is verified. It is useful for early budgeting and almost worthless in a competitive offer.

A pre-approval means a lender pulled your credit and reviewed your income and asset documents. In Southern California, listing agents expect one with the offer, without it, a strong offer can be set aside in favour of a weaker one that came documented.

Shopping several lenders inside a short window counts as a single credit inquiry for scoring purposes, so comparing offers does not meaningfully hurt your score. Compare the Loan Estimate forms side by side, the rate is only one line on them.

Loan programs, without the jargon