Fixed Rate Mortgages in California
Payment locked in. No surprises. No adjustments happening halfway through. Same exact number every month for 15 or 30 years straight.
That’s fixed rate mortgages.
California’s housing market? Total chaos. Gas prices? Who knows. Groceries? Getting expensive. Your income? Hopefully steady. Your mortgage payment with a fixed rate? Guaranteed. Never changes. Not even one dollar.
Over 80% of California buyers pick fixed rate mortgages. Most popular loan type by massive margin. Want to know why? Let me show you.
Why Fixed Rate Works
Been in mortgages since ‘85. Forty years of watching rates swing wild. 18% in early ’80s. 2.5% during COVID. Back to 7% by late 2023.
Seen everything. Market crashes. Housing booms. Rate spikes that destroyed adjustable rate borrowers overnight.
Know what never changed through all that chaos? Fixed rate mortgage payments. Same number. Month after month. Year after year. Through every market cycle imaginable.
Payment protection - Lock 6.5% today. Rates jump to 10% next year? Doesn’t matter. You’re still paying 6.5%. Forever.
Let’s do actual math on this. $700K loan at 6.5% costs $4,423 monthly. Same exact loan at 10%? Costs $6,141 monthly.
Difference? $1,718 every single month. $20,616 saved yearly. Over 30 years? That’s $618,480 saved by locking your rate. Enough to buy another house in some states. Or fund your kid’s entire college education. Twice.
Budget simple - California’s already expensive. At least keep your mortgage payment stable. Groceries climbing 15% yearly? Can’t control that. Utilities spiking? Nope. Property taxes jumping? Definitely not. Car insurance doubling? Good luck stopping it.
Your mortgage with fixed rate? Same number. Every month. No adjustments. No surprises. No “oops, your payment jumped $800 this year.”
Had a client in Oakland. Fixed payment $3,200 monthly since 2018. Property taxes went up $180 monthly over seven years. Insurance up $95 monthly. HOA up $110 monthly. Total increases $385 monthly from stuff he can’t control.
But his mortgage payment? Still exactly $3,200. That predictability saved his budget when everything else exploded in cost.
Long-term security - Month 1 payment equals month 360 payment. No calculations needed. No adjustments. No wondering what you’ll owe next year.
Peace of mind’s worth money. Knowing exactly what you’re paying for 30 years? That’s priceless in California’s chaos market.
Client in San Jose refinanced from ARM to fixed in 2021. Got 3.125% locked. Thought he was overpaying because ARMs were cheaper then.
Fast forward to today. That ARM would’ve adjusted to 7% by now. His fixed payment? Still $3,001 monthly on $700K loan. What that ARM payment would be today? $4,657 monthly.
Saved $1,656 every month by locking fixed. That’s $19,872 saved yearly. Over remaining 28 years? $556,416 total savings. Real money. Life-changing money. All because he locked his rate when he could.
Another client in 2019. Debating hard between 3.875% fixed or 3.25% ARM. “Why pay 0.625% more monthly?” he kept asking.
Because I’ve been doing this since ‘85. Seen this movie before. Know how it ends for ARM borrowers when rates spike.
Pushed him toward fixed. Went with 3.875%. Today? That ARM would be at 6.75%. He’s still cruising at 3.875%. Saving $1,200 monthly compared to where that ARM adjusted. He texts me every few months: “Thanks for talking me out of that ARM.”
Smart decision in 2019 prints money for 30 years.
15-Year vs 30-Year
Pick your term. Changes literally everything about the loan. Most common question I get from every buyer. “Should I do 15 or 30 years?”
Depends. Let me show you real numbers instead of generic advice.
30-year fixed:
- Lower payments. Easier to qualify. More people approved
- More cash flow left over for life, investing, college savings, emergencies
- Way more interest paid over time. Like almost double the home’s price in total interest
- Best for: First-time buyers. Tight budgets. Anyone wanting payment flexibility
Most people pick 30-year. Smart choice usually. Why?
Flexibility matters. Lower payment gives breathing room when life happens. Can always make extra payments when you’ve got extra money. Can’t reduce a 15-year payment when sudden expenses hit. Job loss. Medical bills. Kid needs braces. Car dies. Life costs money. Lower required payment protects you.
15-year fixed:
- Higher payments. Roughly 50% more monthly. Sometimes 60% more depending on rates
- Build equity lightning fast. Own home free and clear in half the time
- Massive interest savings. We’re talking $200K-$400K less paid over life of loan
- Lower rates usually. Typically 0.25%-0.5% better than 30-year rates
- Best for: Strong stable income. People who hate debt. Want financial freedom sooner
High earners gravitate toward 15-year. Doctors. Tech executives. Established business owners. Successful real estate investors. They want the mortgage gone. Building wealth through ownership faster instead of paying banks interest for decades.
Real example on $700K loan at today’s rates:
- 30-year at 6.5%: $4,423 monthly, $892K total interest paid, $1,592,000 total paid over life
- 15-year at 6%: $5,906 monthly, $363K total interest paid, $1,063,000 total paid over life
Difference? $529K saved in interest with 15-year loan.
But monthly payment’s $1,483 higher. Every. Single. Month. For 15 years straight.
Can your budget handle that? Honestly? Because if it can’t, you’re setting yourself up for disaster.
Client last month. Tech product manager in Palo Alto. Makes $280K yearly. Good income. “I want 15-year. Pay it off fast. Build equity quickly.”
Ran the numbers. His payment with 15-year? $6,200 monthly including taxes and insurance. Budget looked tight after taxes. Two kids. Bay Area living expenses aren’t cheap. Childcare alone costs fortune. Private school tuition. Everything expensive.
Steered him toward 30-year at $4,800 monthly. Gives him $1,400 monthly cushion. Then makes extra $500 principal payments whenever bonuses hit.
Best of both worlds. Flexibility when life happens. Discipline to pay extra when he can. Owns the home in 22 years instead of 30 with those extra payments. Still saves $300K in interest versus full 30-year term. But has flexibility to stop extra payments if income changes.
Here’s what I tell everyone considering 15-year. Take the 30-year. Make extra payments voluntarily like it’s a 15-year. You get all the flexibility if disasters strike.
Job loss happens. Medical emergencies drain savings. Kids need braces or orthodontics. Car dies and needs replacing. Whatever life throws at you.
With 30-year loan, you can drop back to required payment anytime. With 15-year? You’re stuck making that high payment or you’re in default. Big difference when emergencies hit.
Fixed vs ARMs
ARMs start lower. Always do. 5/1 ARM might be 5.75% while 30-year fixed runs 6.5%. Looks attractive upfront. Saves you $300-$400 monthly initially.
Sounds great until year 6 hits. ARM adjusts. Now you’re paying 7.5%. Or 8%. Or higher depending on where rates went. That $300 monthly savings? Now costs you $600 extra monthly. Oops.
Fixed costs more upfront. But never changes. Same rate. Same payment. Sleep better at night knowing what you’ll pay.
When do ARMs actually make sense? Planning to sell in 3-5 years definitely. Short-term ownership where you know you’re moving. Military with orders coming. Job relocation expected. Divorce situation where house gets sold soon.
Otherwise? Fixed wins. Every time. Seen too many ARM borrowers get destroyed when rates spike. Don’t want that for you.
California Reality
Home prices here? Absolutely brutal. Let’s talk actual numbers. Real costs. What you’re really getting into.
Median home price in California: $850,000. Not a typo. That’s median. Half the homes cost more.
$850K purchase needs $170K down payment (20%). That leaves $680K loan amount. At current 6.5% rates, that’s $4,298 monthly for principal and interest alone.
But wait. There’s more costs.
Property taxes: roughly $10,625 yearly. That’s $885 monthly added to payment.
Homeowners insurance: roughly $2,400 yearly. That’s $200 monthly more.
Total monthly payment? $5,383. Every single month. No breaks. No vacations from payment. That’s $64,596 yearly just for housing costs.
Need how much income to qualify? Roughly $175K-$200K yearly. Comfortably. Maybe stretch to $160K if everything else is perfect. Debt-to-income ratios max out around 43%-50% depending on lender.
But here’s reality in California. Lenders scrutinize everything. Student loans counting against you. Car payments reducing qualifying power. Credit card minimums. Child support. Alimony. All of it counts against your debt ratio.
Had a buyer couple last week. Combined income $185k. Looked great on paper. Ran the numbers. $1,100 monthly in student loans. $650 car payment. $300 minimum credit card payments. Their qualifying power? Way less than they expected. Qualified for $625k instead of the $750k they wanted.
Why fixed rate matters more here:
- Loan amounts are massive. $4,000+ payments. Can’t afford surprises. Payment jumps on California-sized loans are brutal.
- California homes appreciate historically. Refinance option if rates drop. Seen it happen three major times in my career. Early 2000s. 2012. 2020-2021. People refinanced and saved fortunes.
- Competition fierce. Pre-approval locks buying power for 60 days. Multiple offer situations? Sellers want certainty. Pre-approved fixed rate buyers win.
165,000 fixed rate loans close in California yearly. Representing 80% of all purchase loans. Most popular mortgage by far. There’s a reason. Predictability wins in expensive markets.
Getting Approved
Docs needed:
- Last 2 years tax returns
- 2 months bank statements
- 30 days recent pay stubs
- Employment verification
- ID and Social Security card
Timeline:
- Pre-approval: 24 to 48 hours
- Rate lock: 30 to 60 days after contract
- Close: 30 to 45 days from offer accepted
Smart Strategies
Lock rate early – Have a contract? Lock immediately. Rates can jump 0.25% in a week during volatile markets.
Plan PMI removal – Under 20% down? Target 20% equity through payments or appreciation. Request PMI removal. Saves $200 to $400 monthly on typical California loans.
Make extra payments – Even $100 extra monthly shaves years off the loan. On a $700k 30-year, extra $200/month saves $150k interest and finishes 6 years early.
Watch for refi opportunities – Rates drop 0.75% to 1% below your rate? Refinancing makes sense. We’ll run the math.
Loan Limits by County
Standard counties: $806,500 max for conforming loans High-cost counties: $1,209,750 max (SF, LA, Orange, Alameda, San Mateo, Santa Clara, others)
Above these limits? Jumbo fixed rate mortgages available. Slightly different requirements but still fixed payments.
Bottom Line
Fixed rate mortgages aren’t complicated. Pick 15 or 30 years. Lock your rate. Make the same payment until you own the home free and clear.
In California where everything gets more expensive yearly, fixed payments provide real security. Gas goes up. Groceries climb. Property taxes increase. Your mortgage? Stays the same.
80% of California buyers choose fixed rate. That’s 165,000 loans yearly. There’s a reason everyone picks these.
Get a payment you can afford long-term. Lock it in. Stop worrying about rate increases. Done.