Getting financed to buy a home in Monterey County

Last checked: September 2026. Loan limits change every year, and assistance programs open, close, and change often. Confirm current details with a lender before you rely on them.

For most buyers, financing decides what you can buy and how strong your offer looks. The best time to figure it out is before you start looking at homes, not after you've found the one.

Get approved before you shop

This is the most important thing in this chapter. A lot of buyers want to find the right house first and then deal with the loan. I understand the feeling, but it tends to go badly in two ways:

• You find out you don't qualify after you've fallen for a house. That's discouraging, and it happens more often than people think.
• You lose the house to someone who was ready. While you're gathering documents and waiting on an approval, a buyer who already has one writes an offer and gets it.

Getting pre-approved first costs you nothing but a little paperwork, and it means you shop knowing your real budget.

Pre-qualification vs. pre-approval. A pre-qualification is a rough estimate based on what you tell a lender. A pre-approval means the lender has actually reviewed your income, assets, and credit. Sellers here expect a pre-approval letter with your offer, as covered in Chapter 8.

What lenders look at

Lenders mainly look at four things:

• Income. What you earn, and what you can prove on paper.
• Assets. The money you have for your down payment and closing costs.
• Debt. Your monthly payments on things like car loans, credit cards, and student loans.
• Credit. Your credit score and history.

Credit gets a lot of attention, but your debt matters a lot too. Lenders compare your monthly debts, including the new house payment, to your monthly income. That's called your debt-to-income ratio, or DTI, and it's one of the biggest factors in how much you can borrow.

Here's a simple example. Two buyers earn the same income and have the same savings. One has a 700 credit score and no car payment. The other has a 750 score and a $1,000 a month truck payment. The first buyer will usually qualify for more house, because that $1,000 a month counts against what the lender thinks you can afford. Your credit score still matters, especially for your rate, but a great score doesn't make up for big monthly payments.

What a lender will ask for. Usually your last two years of W-2s or tax returns, recent pay stubs, and a couple months of bank statements, plus permission to check your credit. If you're self-employed, the lender will mostly go off your tax returns, since there are no pay stubs, and may ask for business records too.

Common mistakes that keep people from qualifying

These are the ones I see most often:

• Car payments. This is the big one. I meet a lot of people who could otherwise afford a home, but a large vehicle payment cuts how much they qualify for. If buying a home is a goal in the next few years, think hard before taking on a new car loan.
• Income that isn't on paper. Lenders can only count income you can document, which usually means what you report on your taxes. Business owners who write off as much as possible to lower their taxes are often surprised by how little they qualify for. There are loans for self-employed buyers, like bank statement loans, but they usually need a bigger down payment and come with higher rates. If you're self-employed and planning to buy, talk to a lender and your tax preparer well ahead of time.
• Savings kept in cash. Lenders need to see where your down payment came from, which usually means it has to sit in a bank account for a couple of months before they'll count it. If you keep savings in cash, deposit it early.
• New credit during the process. Don't open new credit cards, finance furniture, or buy a car while you're trying to buy a house. Any of these can change what you qualify for, even at the last minute.
• Changing jobs. Don't quit or switch jobs in the middle of the process without talking to your lender first.

Choosing a lender

Shop around. Rates and fees vary between lenders. When you apply, each lender gives you a standard form called a Loan Estimate, which makes it easier to compare them side by side.

The cheapest option isn't always the best one. Responsiveness matters a lot. During escrow, you and your agent need clear answers, like when it's safe to remove your loan contingency. Some lenders are hard to reach, give vague answers, or don't keep your agent in the loop, and that can create real stress right when deadlines are coming up. In competitive situations, your offer's timelines also depend on how fast your lender can actually close.

Before you commit, it's worth asking a lender:

• How quickly can you usually close?
• Will you keep my agent updated during escrow?
• Will you tell me clearly when my loan is ready for me to remove my contingency?

If you'd like a recommendation, reach out. I work with lenders I trust in both English and Spanish, and you're always free to choose your own.

The main loan types

Conventional. The most common type. Some first-time buyers can put as little as 3% down. If you put down less than 20%, you'll usually pay private mortgage insurance (PMI). Once you reach 20% equity based on the original value, you can ask your lender to remove it, and it generally comes off automatically at 22%. It's worth knowing you can ask, instead of waiting.

FHA. Backed by the federal government, with a minimum of 3.5% down and more flexible credit requirements. FHA loans have an upfront mortgage insurance premium that's usually added to the loan, plus a monthly premium. If you put down less than 10%, that monthly premium generally stays for the life of the loan, and the usual way to get rid of it is to refinance later.

FHA isn't automatically the best choice. A lot of first-time buyers default to FHA because of the lower down payment. Sometimes it's the right fit. But depending on your finances, the mortgage insurance and upfront costs can cancel out the benefit of a lower rate. If you have a decent down payment, a conventional loan may come out ahead. Ask your lender to compare both for your situation.

VA. For eligible veterans, service members, and some surviving spouses. Many borrowers can put nothing down, and there's no monthly mortgage insurance, though most pay a one-time funding fee. Not everyone qualifies for zero down, so confirm with your lender. With military schools like the Defense Language Institute and the Naval Postgraduate School here, VA loans come up a lot on the Peninsula.

USDA. Loans with no down payment for eligible rural areas and income levels. Most of Monterey County's cities won't qualify, but some rural areas might. Check the USDA's eligibility map for a specific address.

Jumbo. Any loan above the local conforming limit. Jumbo loans often need a larger down payment, higher credit scores, and more savings left over after closing.

How much to put down

The minimum down payment is a floor, not a goal. Putting down the least you can is sometimes the only way in, and that's okay. But the less you put down, the more you borrow, which means:

• A higher monthly payment.
• More interest paid over the life of the loan.
• Mortgage insurance on most loans.
• Less equity in your home from day one.

The same goes for zero-down VA loans. Zero down can be a great option, but if you can reasonably put something down, it's worth asking your lender how it would change your payment.

The balance is not draining every dollar you have. You'll want money left for closing costs, moving, and the things that come up when you own a home. A lender can show you what different down payments would look like.

Monterey County's 2026 loan limits

For a single-family home in Monterey County in 2026:

• Conventional loans up to $832,750 are standard conforming. From there up to $994,750, they're "high-balance" conforming loans, which follow similar rules but can price slightly differently.
• Above $994,750, a conventional loan is a jumbo loan.
• FHA loans also max out at $994,750.

These numbers are for the loan amount, not the purchase price. A $1.1 million home with a 20% down payment needs an $880,000 loan, which is still under the conforming limit. Limits usually go up each January, so check the current year's numbers with your lender.

Help with your down payment

There's more help out there than most people realize, but programs come and go, and most have income limits, price limits, or other requirements. Most of this help comes as a loan you'll repay later, usually when you sell or refinance, not as free money.

State programs through CalHFA

The California Housing Finance Agency (CalHFA) works through approved private lenders. For most of its assistance programs, you need to be a first-time buyer, which generally means you haven't owned a home in the last three years. You also need to meet income limits and complete a homebuyer education course.

• MyHome. Available year-round. It's a deferred loan of up to 3.5% of the purchase price with a CalHFA FHA loan, or up to 3% with a CalHFA conventional loan, for your down payment or closing costs.
• Dream For All. The big one, but only open in short windows, and applicants are picked at random, so it's not a guarantee. It offers up to 20% of the purchase price, capped at $150,000, for first-generation homebuyers, meaning your parents didn't own a home while you were growing up. Instead of interest, you repay the original amount plus a share of the home's appreciation when you sell or refinance. The 2026 window closed March 16. If you think you might qualify, watch CalHFA's website for the next round.

Local programs

• Monterey County. The county has a down payment assistance program for homes in unincorporated areas, for households at or below 80% of the area median income. As of September 2026, it's temporarily suspended while new state guidelines are developed.
• Salinas. In early 2026, the city was considering a new first-time buyer program offering a deferred loan of up to $125,000 or 17% of the price. Check with the city for its current status.
• Marina. The city has a Below Market Rate homeownership program, which sells certain homes at reduced prices to income-qualified buyers. These homes come with rules, like limits on resale price.

There are also statewide programs like Golden State Finance Authority's, some of which aren't limited to first-time buyers. Not every lender offers every program, so if assistance is important to you, ask upfront whether the lender works with the ones you're interested in.

Buying with an ITIN

If you file taxes with an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number, some lenders offer ITIN mortgages. They typically require a larger down payment than a conventional loan, often somewhere between 10% and 20%, and rates are usually higher. Requirements can vary, so confirm the details with your lender.

Once you're in escrow

Your lender will check your finances again before closing. Until the loan funds:

• Don't open new credit or buy anything big on credit. Especially not a car.
• Don't change jobs without talking to your lender first.
• Don't move large amounts of money around without a paper trail. Big unexplained deposits can slow down or derail your loan.
• Respond quickly when your lender asks for documents. Delays on your end can push back your closing date.

Where to focus your own research

• Before you look at homes: Get pre-approved, and ask your lender what your monthly payment would actually be at different prices and down payments, including property taxes and insurance.
• If you're planning to buy in the next few years: Keep your debts low, especially car payments, and make sure your income shows up on paper.
• If you're a first-time buyer: Ask lenders about CalHFA and local programs, and whether you'd qualify for Dream For All in the next round.
• If you're a veteran or service member: Ask about a VA loan early.

If you'd rather go through any of this in Spanish, I'm happy to help.

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This is general information, not financial or lending advice. Loan programs, limits, and requirements change often and depend on your situation. Talk to a licensed lender about your options. I'm a real estate agent, not a lender.