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Low Down Payments on Homes

The Lowdown on a Low Down

IT’s not just for first timers anymore!

Freddie Mac and Fannie Mae are two of the many agencies offering mortgage programs that allow buyers to put down as little as 3% to purchase for purchase. The strength of our current housing market has spurred a rise in home equity. As such, home equity was used to start 7.3% of U.S. businesses in the last year, according to the Annual Survey of Entrepreneurs.  Homeowners are capitalizing on their equity and using the profit from their home sale to pay off high-interest credit cards, fund education or even start a business. It turns out low down payments aren’t just great for first-time homebuyers anymore. The 20% rate of property mortgage insurance has suddenly become a welcomed encumbrance to some homeowners that are preferring to utilize liquid asset to further their dreams, druthers, or what-nots.

According to Black Knight Financial Service’s Mortgage Monitor Report, 1.5 million home purchases were made with down payments less than 10% in the last 12 months.

What would you use the equity in your home to accomplish?

Meet with a real estate professional who can evaluate your ability to achieve your dreams today!

Buying a Home

Planning and Preparation For Your Home Purchase


Unlike other online shopping, it involves more than adding to your cart and cashing out with Paypal ... And the highest bidder does not always win!

Quite often, the strongest offer on a home, is not the highest offer, and the discerning seller knows this. A strong offer is one in which an educated buyer has prepared a prudent offer, confident of their financial position because it is merited with a lending statement of approval. 

You are about to embark on possibly the biggest financial voyage of your life. The process can be intimidating and daunting. You can pace yourself and control the process with these simple steps of planned preparation:

  • Know Your Credit Score. Did you know that the three credit bureaus, Equifax, Experian, and TransUnion are each required to give you a free credit report once a year.  By checking your score long before you’re ready to make an offer you’ll be afforded time to correct any errors you may discover in your credit reporting. A study by the Federal Trade Commission found that one in four Americans found mistakes and that 5% of those mistakes could have lead to higher loan rates; errors worth omitting.
  • Determine Your Affordability.  Lenders will consider your debt-to-income ratio. The debt considered includes a future mortgage and other debts such as auto loans, student loan, or revolving credit cards. They want to see a total debt load no more than 43% of your gross monthly income; the lower the better, since this helps determine your rate. You can find debt-to-income calculators on the web. Once you’ve determined your percentage, then you will have a better idea of the mortgage amount you can afford. However, you should ask yourself if how much you can afford is the same as how much you want to afford. You don’t want to stretch yourself so thin that when a rainy day comes you will find yourself in a compromising situation.
  • Plan For Your Down Payment. Ideally a 20% down payment is keen; your loan costs will be lower, and you’ll get a better interest rate. If not feasible for every buyer, lenders will add a property mortgage insurance premium on top of the mortgage premium to protect their investment should the buyer default on their loan; typically between 0.5% to 1% of the entire loan amount on an annual basis. If you are struggling for a down payment, there may be programs that can help. FHA offers loans with only a 3.5% down payment, but they will also require a mortgage insurance premium. Since money does not grow on trees, it is wise to begin saving as soon as possible for a down payment. Banks like “seasoned” money; consistent fund balances in your account 60 to 90 days before your loan application. It is worth celebrating that financial gifts and bonuses received close to the time you are buying can count towards your down payment!
  • Begin to Gather Paperwork. Begin now to collect the documentation banks will require accompanied with their loan application in consideration of your loan request. This list may include:
  1. W-2 forms from the last 2 or 3 years, or Business tax returns if you are self-employed
  2. Personal tax returns from the past 2 or 3 years
  3. Most recent pay stubs
  4. Credit card statements, loan statements, and bank statements
  5. List your personal addresses as far back as 7 years
  6. Have any brokerage account statements for the most recent 2 to 4 months
  7. 401K statements or retirement fund statements

Start Shopping! Now prepared, you are a strong and savvy buyerYou know what you want and with the help of a Buyer’s Agent you are prepared to go and get it!  

Looking for a new home? Use our Quick Search or Map Search to browse an up-to-date database list of all available properties in the area, or use our Dream Home Finder form and one of our San Luis Obispo Real Estate professionals will conduct a personalized search for you.

Where to Buy a Home in SLO County

Where to go, to find the perfect home for you in price, value, climate and employment?

Our San Luis Obispo office, being located downtown San Luis Obispo on Marsh, gets frequent walk-in clientele; often visitors from outside our region. Much of the time spent in discussion is devoted to apprising visitors of the differences attributed to each unique city within San Luis Obispo County. The list of comparison is not short of climates and micro-climates, industry and workplace, entertainment and tourism, variance and vibe; and in a real estate office, bang and the buck are always at the top of that list!

With a wide spread in median home prices from town to town throughout SLO County, it is worthwhile for a home buyer to give consideration to each region; especially first-time home buyers lacking down payments and the ability to compete with all cash buyers. From North County to South County (Arroyo Grande, Nipomo, Grover Beach) and Coastal (Morro Bay, Cayucos, Avila Beach, Pismo Beach), the price per square foot median can range from $238-$603 per square foot.  (Statistics gathered from Realtor.com)

It is believed that the further away you get from the city of San Luis Obispo, the county’s hub, the more affordable the real estate.  But given the diversity in towns from one another, there can be variances to that generalization. Homes are less expensive in the North County (Santa Margarita, Atascadero, Templeton, Paso Robles) where the great divide happens at the Cuesta grade heading north up the 101. One of the more noted degrees of separation is the climate change which on average can be about a 10-degree difference or more.

Certainly, for the money you can get more square footage and/or property for your dollar north over the grade. Real estate transactions are more plentiful in the north county whereas in San Luis Obispo there maintains a shortage of inventory driving demand and requiring competitive offers. When the market enters this kind of frenzy, paying top-dollar for a home means you are entering that investment with less equitable asset. Equity built in one’s home becomes a strength factor for home buyers looking for their subsequent replacement properties. These seasoned home owners and asset rich investment brokers are who first time home buyers must compete against. The factor of securing a home that is equity poor because of a potentially over-inflated purchase price might be an example of what buyers should consider adding to their “con” side of a list. To each his own.

Deciding where to live in San Luis Obispo County is a good problem to have, regardless. It is a worthwhile exploration to find merit of each esteemed town in the county. The challenge is raised, and granted, the fun is in the discovery. Should you need assistance, guidance, or an escort CONTACT US, we have over 35 agents here at San Luis Obispo Realty and Bayshore Realty (our Morro Bay real estate partner) that would be thrilled to tell you all we know to be true of our great county!

Why Buy Real Estate in SLO?

San Luis Obispo, California Voted the Best Blend of Sunshine, Food, and Beaches

Our city of San Luis Obispo has ranked in as one of the 25 Best Towns Ever, on Outside Magazine’s list for “Where to Live Now.” Three other west coast cities were included on the list: Bishop, California, Bend, Oregon and Seattle, Washington. The areas on the list were recognized for “having all the adventure a traveler could ask for, while also offering drool-worthy food and drink scenes, a kid-friendly environment and a welcome mat to people of all backgrounds.”

A special advisory council put together to nominate places commended San Luis Obispo as “Set just minutes from both the Pacific Ocean and the Coast Range, San Luis Obispo is roughly halfway between San Francisco and Los Angeles and, fortunately, is nothing like either city.” It also cited San Luis Obispo for our easy commutes, our relaxed “SLO Life” and perpetual sunshiny days.

Other information included in the aspect of each area was the cities’ population, median income levels and median housing prices. It was noted that San Luis Obispo homes aren’t cheap but they were taking into consideration the cost for “this kind of paradise”. Population: 47,000 Median home value: $546,000 Median household income: $46,000

Your neighbors and friends at San Luis Obispo Realty are always ready to service your real estate needs and will happily offer free evaluations or consultations regarding the consideration of our current market here in San Luis Obispo County. See more about why to buy real estate in San Luis Obispo.

Give us a call or register today to view daily market activity! 

Affordable housing in San Luis Obispo

Farm to Table, San Luis Ranch, a Homegrown Community

“If you were raised in SLO, or work in SLO, you should be able to live in SLO”, is the movement mantra expressing concern of the need for more affordable housing in San Luis Obispo.

San Luis Ranch addresses the critical need for new affordable and workforce housing, and allows for a walkable, bike-friendly, recreation-oriented community that seamlessly integrates into the existing environment,” says developer Gary Grossman on his proposal headed before the San Luis Obispo City Council on July 5.

The San Luis Ranch project proposes 282 single-family units and 298 multi-family units; 34 being deed-restricted affordable units designated for various levels of qualifying low income residents. The housing units would range in size from a 250 s/f efficiency apartment to a 2,200 s/f home. In today’s market, units might range from about $350,000 to $600,000. The development would devote 40 acres to housing and 60 acres for organic farming and open space. Around 200,000 square feet would be used for commercial space, 150,000 square feet for office space. There is also intent for a 200-room hotel to be included in the plan.

Great news to SLO residents, buyers must already live or work in the city to have first dibs! Once the list of local applicants runs out, home purchases would be opened to anyone.

Other SLO projects planned or in the works;

Avila Ranch, a proposed 720-home development near the airport will be heard by the Planning Commission later this month.

and our Morro Bay Affiliate & second location

Morro Bay Real Estate Partner

San Luis Obispo Realty
441 Marsh Street
San Luis Obispo, CA 93401

CA BRE# 00577121


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