Discover the Best Home Financing Options
- Megan Kilmer
- Oct 14
- 3 min read
Trying to get a home loan is daunting where does one even start? Don’t worry! I’m here to help! With access to the best home loan choices so you can find the right solution for your needs. Whether you’re a first-time buyer, upgrading, or investing, understanding your options is key to making smart financial decisions.
Home Loan Choices: What You Need to Know
Different loans suit different situations, budgets, and goals. In Santa Cruz especially we have more need for affordable housing and a lot of folks who need to use a Jumbo Loan because of home prices. Here’s a quick overview of the most common home loan choices:
Conventional Loans: The most popular and typically require a higher credit score and down payment. Downpayment options as low as 3-5%
FHA Loans: Perfect for buyers with lower credit scores or smaller down payments. Downpayment as low as 3.5%
VA Loans: Available to veterans and active military members and their families. These loans offer excellent terms with no down payment.
USDA Loans: For rural homebuyers, these loans offer low interest rates and no down payment. Options for 0 Down.
Adjustable-Rate Mortgages (ARMs): Start with a lower interest rate that adjusts over time, ideal if you plan to move or refinance within a few years.
Fixed-Rate Mortgages: The interest rate stays the same throughout the loan term, providing stability and predictable payments. (All loans above can be fixed or ARMs)
Jumbo Loan
For homes that exceed conforming loan limits, jumbo loans cover higher amounts but usually require stronger credit and larger down payments. In 2025 a Jumbo loan in Santa Cruz County is any loan above $1,178,750. For Santa Clara County above $1,209,750, and Monterey County above $819,000. (If you want to know what it is in your county just shoot me an email: megankilmer@gmail.com)
What is important to know when getting a loan?
Assess Your Financial Health
Take a close look at your credit score, income, debts, and savings. This will help you understand what loans you qualify for and what down payment you can afford.
Consider Your Long-Term Plans
Are you planning to stay in the home for many years, or is this a short-term investment? Fixed-rate loans offer stability for long-term stays, while ARMs might save you money if you move soon.
Understand the Costs
Look beyond the interest rate. Factor in closing costs, mortgage insurance, and any fees. Sometimes a loan with a slightly higher rate but lower fees can be a better deal.
Get Pre-Approved
Pre-approval shows sellers you’re serious and gives you a clear budget. It also helps you compare loan offers more effectively.
Work with a Trusted Mortgage Professional
A good loan officer or broker can explain your options clearly and help you find the best deal tailored to your needs.
Remember, the right home loan choice can save you thousands over the life of your mortgage!
Tips for Starting your Homeownership Journey
Improve Your Credit Score
Pay down debts, avoid new credit inquiries, and check your credit report for errors. A higher score can get you better rates.
Save for a Larger Down Payment
The more you put down, the less you borrow. This can lower your monthly payments and sometimes eliminate mortgage insurance.
Understand Mortgage Insurance
If your down payment is less than 20%, you’ll likely pay mortgage insurance. In Santa Cruz County we (on average) have homes that increase value +18.0% year-over-year as of August 2025 according to Redfin. So putting less than 20% down and waiting for a few years to re-appraise and drop your PMI could save you time an money verses waiting to buy.
Consider Loan Term Length
Shorter terms (like 15 years) have higher monthly payments but save you money on interest. Longer terms lower payments but cost more over time.
Ask About First-Time Buyer Programs
Many programs offer down payment assistance or favorable terms for first-time buyers. In Santa Cruz we have Habitat for Humanity, the Realtor Association, CalPERS & CalSTRS mortgage benefits, Measure J, and more!
Ready to Take the Next Step?
Give me a call text or email
Megan Kilmer
831-888-7530
DRE02095192 | NMLS2436714
Karma Mortgage Solutions
