Mortgage Volumes Shrink, But Loan Sizes Increase
California’s mortgage market is changing quickly—and the buyers who succeed are the ones who move with it. At LBC Mortgage, we help our clients stay one step ahead of evolving lending trends. From shifting credit standards to climate risk and affordability strategies, today’s mortgage approvals depend on smart planning and expert guidance. Here’s what we’re seeing in California—and how we help you get approved.
Home financing in California has slowed dramatically since the peak of the 2020 boom. In the fourth quarter of 2020, nearly 930,000 Californians took out new mortgages. By early 2023, that number fell to about 95,000. But the average loan size went up—from roughly $468,000 to almost $594,000.
This shift shows that fewer buyers are qualifying, and the ones who do tend to be higher-income individuals securing larger loans. It also means there’s less room for error. When lenders tighten standards, every detail matters. That’s where our experience makes the difference. At LBC Mortgage, we guide you through each step to present a strong application and match you with the right loan.
Rates Are Cooling, and Buyer Optimism Is Returning
After months of high borrowing costs, mortgage rates are finally trending down. According to the California Association of Realtors, the average 30-year fixed rate is expected to drop from 6.6% in 2024 to around 5.9% in 2025. That’s welcome news for buyers, especially those sidelined by affordability concerns.
As rates ease, more buyers are entering the market—and competition may heat up again. We help you lock in favorable terms early and prepare your file for fast approval. Whether you’re buying your first home or moving up, we make sure your loan is ready when opportunity strikes.
Expanded Credit Models Open Doors for More Borrowers
One of the most important changes in the mortgage world is the shift to new credit scoring models. Starting in 2025, lenders can use VantageScore 4.0 for loans backed by Fannie Mae and Freddie Mac. This update allows nontraditional credit data, such as rent, utility, and phone payments, to count toward your score.
That’s a major win for many California renters who have solid payment histories but limited credit lines. About 5 million Americans could qualify for mortgages under this change—many of them in high-rent areas like Los Angeles, the Bay Area, and San Diego.
At LBC Mortgage, we’re already helping clients prepare for this shift. If your credit history includes alternative data, we know how to present it effectively. We work directly with lenders who understand the new model and are ready to make approvals based on your full financial picture.
Mortgage Options Vary in Wildfire-Prone Areas
Another growing challenge in California is climate-related risk—especially wildfires. Many large banks are pulling back from lending in wildfire zones due to insurance limitations and rising property risk. In contrast, online lenders and fintech firms are stepping in, offering flexible terms where traditional banks won’t.
The key is knowing which lenders are active in your area and what conditions they require. At LBC Mortgage, we stay informed on lender policies related to fire zones, insurance coverage, and regional exposure. If you’re buying in an affected area, we guide you to lenders who understand the risks—and are still lending.
Condo Buyers Face New Financing Hurdles
Condominiums are often a more affordable entry point into California’s real estate market. But many buildings are now under increased scrutiny from Fannie Mae due to structural issues, lawsuits, or documentation gaps. Properties flagged on this list are considered high risk and often ineligible for conventional financing.
The number of flagged condo buildings in California rose sharply from about 170 in 2023 to nearly 730 in 2025. Buyers trying to purchase units in these buildings often face delays, higher down payment requirements, or full loan denials.
We do the homework upfront. At LBC Mortgage, we verify a condo’s eligibility before you fall in love with a unit. If your dream property is on the restricted list, we offer alternative solutions or help you find similar options that qualify under current rules.
Creative Solutions Help Buyers Overcome Affordability Gaps
With California home prices still high and rates hovering around 7% earlier this year, many buyers are turning to creative financing to bridge the gap. One common strategy is a rate buydown—where a lump-sum payment reduces the interest rate for the first few years, or for the life of the loan. Nearly 40% of new home sales now include some form of rate buydown.
Another growing trend is family assistance. More than 20% of Gen Z and millennial buyers use gifted funds or inheritances for down payments. In 2024, the average family gift toward a down payment reached $63,000.
We help structure both approaches to meet lender guidelines and maximize approval odds. Whether you’re negotiating with sellers for a buydown or receiving funds from a family member, we ensure everything is documented correctly—and your loan stays on track.
Who’s Getting Approved in Today’s Market?
The profile of a successful mortgage applicant in California has shifted in recent years. Today, approvals tend to go to borrowers who:
Have Strong Assets or Large Down Payments
With fewer mortgages being issued overall, lenders are giving preference to buyers with strong financial reserves. A larger down payment improves your chances and helps you secure better terms.
Can Benefit From New Credit Models
Borrowers with limited credit histories but consistent rent or utility payments now have a better shot at approval. VantageScore 4.0 gives credit to your real-life financial habits.
Are Flexible About Location or Property Type
Those willing to explore less competitive regions—or work with experienced brokers to finance homes in wildfire-prone zones—see more opportunities open up.
Know How to Leverage Creative Financing
Using rate buydowns, gifts, and other funding strategies gives buyers a major edge. We tailor these approaches to your situation and make sure they align with lender requirements.
Why LBC Mortgage Is the Right Partner
Mortgage trends are changing fast, and success depends on having the right guidance. At LBC Mortgage, we’re not just watching the market—we’re working within it every day. That means we spot shifts early, prepare you for what’s next, and help you take advantage of every opportunity.
We understand California. From regional zoning changes to wildfire maps, we help you navigate complex approvals and avoid costly delays. Whether you’re applying with a conventional lender, exploring fintech options, or using nontraditional credit, we have the tools and expertise to help.
Our relationships with a wide range of lenders mean more options for you. And because we handle every detail—from condo certifications to insurance guidance—you can move forward with confidence.
