🏡 Understanding the Loan Types on Your California Purchase Agreement (and Beyond)

If you’re buying a home in Southern California—whether it’s Pasadena, Arcadia, or anywhere in the San Gabriel Valley—you’ve probably stared at the loan section of the California Association of REALTORS® (CAR) Residential Purchase Agreement (RPA) and thought, “What does all of this mean?” Don’t worry—you’re not alone. The 2025 RPA lists the main loan types buyers typically use, and understanding them is the first step to avoiding surprises, staying on budget, and closing on time. Let’s break it down in plain English.

📄 Loans Listed on the 2025 CAR RPA

On the RPA, you’ll see checkboxes for a few core financing types. Here’s what each one means and what buyers should know:

1. Conventional Loan (Conforming Loan)
This is the most common mortgage for buyers with solid credit and stable income. Conventional loans follow Fannie Mae and Freddie Mac guidelines.

• Down Payment: Typically 5–20% of the purchase price.

• Timeline: 30–45 days from application to funding is average.

• What to Watch: Private mortgage insurance (PMI) is required if your down payment is less than 20%, which adds to your monthly payment. Credit score of 620+ is usually needed.

2. FHA Loan (Federal Housing Administration)
FHA loans are popular with first-time buyers because they allow smaller down payments and slightly lower credit scores.

• Down Payment: As low as 3.5%.

• Timeline: 30–50 days, can take slightly longer due to FHA appraisal and underwriting.

• What to Watch: Upfront and annual mortgage insurance premiums (MIP). Property must meet FHA standards.

3. VA Loan (Veterans Affairs)
Reserved for eligible military service members and veterans, VA loans require no down payment.

• Down Payment: $0.

• Timeline: 30–45 days if all paperwork is in order.

• What to Watch: Must meet VA eligibility. Funding fee applies unless exempt. Homes must meet VA minimum property requirements.

4. USDA Loan (U.S. Department of Agriculture)
For buyers in eligible rural areas, USDA loans are zero-down-payment loans designed to support rural housing.

• Down Payment: $0.

• Timeline: 45–60 days, as USDA requires additional verification and approval.

• What to Watch: Income limits apply. Property must be in a USDA-eligible area and meet program standards.

5. Cash Purchase
Sometimes, buyers bypass loans entirely. While not technically a mortgage, this is a financing option listed on the RPA.

• Timeline: Can close very quickly, sometimes 7–14 days.

• What to Watch: Proof of funds is required. Cash buyers skip interest but need all funds upfront.

🔑 Expanding the List: Top 10 Loan Options in California

Now that we’ve covered what’s on the CAR RPA, let’s look at additional loans that are commonly used in California:

6. Jumbo Loan
For high-priced properties above conforming limits (in LA County, $1,089,300 for 2025).

• Down Payment: 10–20%.

• Timeline: 30–50 days, sometimes longer due to stricter underwriting.

• What to Watch: Higher credit score (700+ recommended) and stricter debt-to-income ratios.

7. CalHFA Loans
State-specific loans designed for first-time buyers in California.

• Down Payment: 3–3.5%, with down payment assistance programs available.

• Timeline: 30–45 days.

• What to Watch: Must meet first-time buyer eligibility and complete a homebuyer education course.

8. HomeReady / Home Possible Loans
Low down payment conventional programs from Fannie Mae and Freddie Mac.

• Down Payment: 3%.

• Timeline: 30–45 days.

• What to Watch: Income limits and mortgage insurance apply.

9. Adjustable-Rate Mortgage (ARM)
Interest rate changes after an initial fixed period (e.g., 5/1 ARM = fixed 5 years, then adjusts annually).

• Down Payment: 5–20%.

• Timeline: 30–45 days.

• What to Watch: Monthly payments can increase after initial fixed period; good for buyers planning to sell or refinance before adjustment.

10. Portfolio Loans
Held by lenders in-house, not sold to Fannie Mae/Freddie Mac.

• Down Payment: 10–20%.

• Timeline: 30–50 days depending on lender.

• What to Watch: Lenders set their own underwriting rules; may be more flexible for unique income or credit situations.

💡 Practical Tips for Buyers

1. Know Your Timeline: Some loans take longer than others. For example, USDA and FHA loans may have extra steps in underwriting and appraisals. Don’t assume all 30–45 day timelines are guaranteed.

2. Down Payment Planning: Even if a loan allows a low down payment, make sure you budget for closing costs, escrow, and prepaid items.

3. Credit and Income Prep: Lenders look at steady employment, income history, and credit scores. If you’ve been in the same field for 2+ years or a related position, you can usually start qualifying conversations early.

4. Down Payment Assistance: Programs like Home Fund It can provide cash assistance to supplement your down payment. Learn more here: https://www.homefundit.com/realtor/MatthewGarciaTKWMG.

5. Watch Loan Conditions: Some loans, like ARMs, have future risk. Understand your potential payment changes and how they affect your budget.

6. Local Market Awareness: In the San Gabriel Valley, where homes in Arcadia, Monrovia, and Pasadena often exceed $800,000, even conventional loans may require strategic down payment planning. Be realistic about what you can afford rather than banking on rates dropping or refinancing later.

📞 Next Steps

Before you dive in, take a moment to see what you qualify for, outline your budget, and determine which loan type makes sense for you. This is where working with a licensed realtor and lender can save you headaches. Contact me to map out your next steps via text, call, or email.

Sources:

• California Association of REALTORS®, 2025 Residential Purchase Agreement: https://www.car.org

• Home Fund It: https://www.homefundit.com/realtor/MatthewGarciaTKWMG

• Fannie Mae HomeReady Program: https://www.fanniemae.com

• Freddie Mac Home Possible Program: https://www.freddiemac.com

• U.S. Department of Veterans Affairs Home Loans: https://www.va.gov/housing-assistance/home-loans/

• U.S. Department of Agriculture Rural Development Loans: https://www.rd.usda.gov/programs-services/single-family-housing-guaranteed-loan-program

• CalHFA Programs: https://www.calhfa.ca.gov

Disclaimer:
This blog post was created using a combination of personal insights, publicly available real estate resources, and AI writing assistance via ChatGPT by OpenAI. While every effort has been made to ensure accuracy and relevance, the information provided is intended for educational and informational purposes only and should not be considered legal, financial, or professional advice.

Readers are encouraged to consult with licensed professionals before making any real estate decisions. Turn Keys With MG, Matthew Garcia DRE# 02251181, and Real Brokerage Technologies assume no liability or responsibility for actions taken based on the content of this blog. Always verify any legal or regulatory advice with appropriate authorities or qualified professionals.