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California, situated on the Western coast of the United States, is home to almost 40 million people. Mount McKinley, the highest point in the country, and Death Valley, the lowest point in the country, are located in the state. The capital is Sacramento, and the largest city is Los Angeles. California is home to sports teams, gorgeous beaches, and towering mountains. Many of the residents of the state are looking to purchase a home in the near future. In order to finance the home, most people will need a mortgage loan.

California Housing Market Outlook

According to, California is expected to see a slight increase in the housing market. There are projected to be over 400,000 mortgages approved in the state within the next year. This is an increase of about 1.4%. The median home price in California stands at around $525,000, which is an increase of 4.3%. Because of the increase, numerous residents of the state will not be able to afford a home.

California Mortgage Loan Interest Rates

Last year, California interest rates on mortgages hit a record low. Next year, rates are expected to increase slightly, making the average interest rate on a 30-year fixed rate 4%. People who want a shorter term, such as a 15-year loan can expect an interest rate of 3.13%. The mortgage rate will depend on the amount of the down payment, the borrower’s credit score, and the type of loan.

Types of Mortgage Loans in California

When purchasing a home, buyers need to understand the options available, so they can choose the best one for their needs. Here are some types of mortgages that lenders in California offer:

  • Fixed-Rate Mortgage: A fixed rate mortgage loan has a constant rate for the life of the loan. When a borrower obtains the loan, he will get an interest rate. With a fixed-rate, the interest will not increase or decrease throughout the life of the loan; therefore, the monthly payment will stay the same. This is a good option for people who intend to stay in their home.
  • Adjustable-Rate Mortgage: An adjustable rate mortgage will change depending on the current market. It will stay fixed for an introductory amount of time; then it could increase or decrease. If a homeowner plans to only have the home for a few years, this might be the best option.
  • Conventional Home Mortgage: This type of loan is not insured by the federal government.
  • FHA Loan: This government-backed loan is one of the most popular mortgage loans as they are available to all borrowers. The down-payment amount could be as low as 3.5%, but borrowers are required to purchase mortgage insurance.
  • VA Loans: Military service members and retired service members have the option of a VA loan. The main benefit for borrowers with this type of loan is that people can obtain a loan without having to make a down-payment.

Forecasts by Region

The San Francisco Bay area boasts a much higher median home price. This region of the state has a median home price listed at $833,000, which is a slight increase. The Central Valley has only $294,000 as the median home price, while Southern California’s median home price stands at $501,000.

California Mortgage Loan Lenders

Lenders for mortgage loans in California are numerous. Borrowers can search online to find a reliable lender. Each lender is different, so borrowers need to compare rates and terms. Borrowers need to know what documents will be required and how long the process will take. People will want a lender who makes the lending process as simple as possible. It is a good idea for individuals to check their credit score before applying for a loan.

Residents in California have a positive outlook on mortgage loans within the next year. People who wish to obtain a loan should research the options to see what they can obtain. Borrowers can then get the financing they need to purchase the home of their dreams.