Los Angeles home prices mean most buyers here are dealing with loan amounts that exceed national averages significantly. The mortgage that's right for someone buying a $450,000 condo in Phoenix is often the wrong choice for someone buying a $1.1 million duplex in Culver City.

This is a plain-English guide to the mortgage structures LA buyers actually use, what each costs, and when each one makes sense.

Conventional Loans (Under $1,089,300)

Conventional loans are the most common mortgage type — they meet the guidelines set by Fannie Mae and Freddie Mac and carry the lowest rates available for most buyers. In Los Angeles County, the 2025 conforming loan limit is $1,089,300, meaning you can borrow up to that amount and still qualify for conventional terms.

Minimum down payment: 3–5% for primary residences, 10–25% for investment properties.

Best for: Buyers purchasing primary residences under $1.4M (allowing for a 20%+ down payment to stay under the conforming limit), or buyers with strong credit who want the best available rate.

PMI consideration: Private mortgage insurance is required if your down payment is under 20%, typically adding 0.5–1.5% of the loan amount annually to your payment. On a $900,000 loan that's $375–1,125/month — a meaningful cost that often makes the case for a slightly larger down payment if you have it available.

Jumbo Loans (Over $1,089,300)

Any loan above the conforming limit is a jumbo loan, and jumbo is the primary mortgage category for a significant percentage of LA purchases. Rates on jumbos are typically 0.25–0.5% higher than conforming loans, though this gap narrows significantly for well-qualified borrowers.

Typical requirements: 10–20% down payment, credit score of 700+, significant liquid reserves (often 12–18 months of payments), and a lower debt-to-income ratio than conventional loans allow.

Best for: Buyers purchasing homes in the $1.5M–$5M range — the core of most Westside and high-demand LA transactions. This is the majority of our buyer clients at AMRE.

The underwriting difference: Jumbo loans are portfolio loans held by individual banks rather than sold to Fannie/Freddie, which means each lender sets its own guidelines. Shopping jumbo rates matters significantly more than shopping conforming rates — the variance between lenders can easily be 0.375–0.75%, which on a $2M loan is $7,500–$15,000 per year.

FHA Loans

FHA loans are government-backed mortgages with more lenient qualification requirements — lower credit score floors (580+), higher allowable DTI ratios, and down payments as low as 3.5%. In LA County, the FHA limit is $1,089,300, matching the conforming limit.

The trade-off: FHA requires both an upfront mortgage insurance premium (1.75% of the loan amount at closing) and ongoing monthly MIP for the life of the loan — it cannot be removed unless you refinance into a conventional loan at 20%+ equity. On a $900,000 loan, that's $15,750 upfront plus roughly $700–800/month indefinitely.

Best for: First-time buyers with limited down payment funds or credit scores in the 580–680 range who prioritize getting into the market over minimizing ongoing costs. In a market where appreciation runs 5–7% annually, the cost of MIP can still be worthwhile if the alternative is waiting two more years to save a larger down payment.

Competitive note: In multiple-offer situations, FHA offers sometimes face resistance from sellers who associate FHA with stricter appraisal requirements and slightly longer timelines. This is worth discussing with your agent when setting up your offer strategy.

Portfolio and Bank Statement Loans

Portfolio loans are held entirely by the originating lender and never sold to Fannie/Freddie. This means the lender can write its own rules — which is extremely valuable for buyers who don't fit the conventional mold.

Who this serves:

  • Self-employed buyers whose tax returns show lower income than their actual earnings due to legal business deductions. Bank statement loans use 12–24 months of personal or business bank statements to calculate qualifying income instead of tax returns.
  • High-net-worth buyers with substantial assets but irregular income — asset depletion loans calculate qualifying income by dividing total assets by the loan term.
  • Foreign nationals purchasing in LA without US credit history — several portfolio lenders have specific programs for this.
  • Buyers with recent credit events — some portfolio lenders will work with borrowers who have a bankruptcy or short sale as recently as two years back.

The cost: Portfolio loans typically carry rates 0.5–1.5% higher than conforming or jumbo loans. That premium is the price of the flexibility. For many buyers — particularly LA's large self-employed population — it's the difference between buying and not buying.

TIC and Fractional Financing

Tenants in Common (TIC) properties — a growing ownership structure in LA — require specific financing because the buyer is purchasing a fractional interest in a building rather than a discrete unit. Standard conventional and jumbo lenders typically won't finance TICs.

Specialist TIC lenders offer loans up to 85% LTV, with both fixed and interest-only options. Rates typically run 0.5–1% above comparable conventional rates, which in practice means the lower purchase price of a TIC unit often more than compensates for the rate differential. This is an evolving market and more lenders are entering it each year.

DSCR Loans for Investors

Debt Service Coverage Ratio (DSCR) loans qualify the borrower based on the property's rental income rather than the buyer's personal income. If the property's monthly rent covers the mortgage payment — typically at a ratio of 1.0–1.25x — the loan is approvable regardless of W-2 or self-employment status.

Best for: Investors purchasing duplexes, triplexes, or fourplexes as investment properties (not owner-occupied). Down payments typically start at 20–25%, and rates run 1–1.5% above conventional investment property rates. For investors building a portfolio, DSCR loans are an extremely efficient tool because they don't require personal income documentation or tax returns.

One More Thing: The Lender Is as Important as the Loan

In Los Angeles, where multiple-offer situations are common and listing agents scrutinize offer packages carefully, your lender's reputation and responsiveness is a real competitive factor. A pre-approval letter from a lender known for closing on time carries more weight than one from an unknown online lender, particularly in tight situations.

The right mortgage at the wrong lender can cost you the deal. Talk to your agent before you commit to a lender — they'll often have direct insight into which lenders perform reliably in the specific price ranges and property types you're targeting.