Financing Options

The most common loan type, not backed by a government agency. Ideal for buyers with strong credit and a down payment of 5–20%.

Conventional loans offer competitive interest rates and flexible terms (10, 15, 20, or 30 years). With 20% down you avoid private mortgage insurance (PMI). Conforming conventional loans must fall within FHFA loan limits — in San Luis Obispo County, the 2026 conforming limit is $806,500.

Backed by the Federal Housing Administration. Allows down payments as low as 3.5% and is more accessible for buyers with lower credit scores.

FHA loans are popular with first-time buyers. They require mortgage insurance for the life of the loan (or until refinanced). FHA loan limits in San Luis Obispo County align with conforming limits. A minimum credit score of 580 is typically required for the 3.5% down option.

Available to eligible veterans, active-duty service members, and surviving spouses. Offers 0% down and no private mortgage insurance.

VA loans are one of the most powerful financing tools available. There is no down payment requirement, no PMI, and competitive rates. A VA funding fee applies but can be rolled into the loan. Eligibility is determined by length and type of military service.

For loan amounts that exceed conforming loan limits. Common on the Central Coast where home prices often exceed $800,000.

Jumbo loans are not backed by Fannie Mae or Freddie Mac and carry stricter qualification requirements. Lenders typically require a credit score of 700+, a down payment of 10–20%, and significant cash reserves. Rates are competitive but vary more widely between lenders.

Starts with a fixed rate for an initial period (e.g. 5, 7, or 10 years), then adjusts periodically based on a market index.

ARMs can offer lower initial rates than fixed-rate loans, which may make sense for buyers who plan to sell or refinance before the adjustment period begins. After the fixed period, rates adjust annually within defined caps. Common structures include 5/1, 7/1, and 10/1 ARMs.

Backed by the U.S. Department of Agriculture for eligible rural and suburban properties. Offers 0% down for qualifying buyers.

USDA loans are available in designated rural areas and some suburban communities. Parts of San Luis Obispo County may qualify. Income limits apply based on household size and location. Mortgage insurance is required but at lower rates than FHA.