Recently, I observed two buyers who made offers in Monterey. One had a credit score in the 760 range, while the other was in the 700 range. Their down payment percentages were the same. However, the interest rates and approval speeds differed.

The average home value in Monterey, according to Zillow, is $1,180,394 as of June 30, 2026. The median listing price is set at $1,048,167. Due to the area's characteristics, there are not many listings, and the waiting period is relatively short.

Calculating the down payment for this price range looks like this: FHA at 3.5 percent is about $41,314. If your credit score is between 500 and 579, you would need 10 percent, which is about $118,039. A 20 percent down payment would be around $236,079, and PMI would be eliminated.

Returning to the two buyers mentioned earlier, those with scores above 780 receive a rate of 6.59 percent, those in the 760 range get 6.66 percent, those in the 740 range get 6.75 percent, and those in the 700 range receive 6.91 percent. This data is from themortgagereports.com as of July 2026. Even with the same down payment, a single point in credit score can significantly affect monthly payments.

There's no need for lengthy methods to improve your credit score. Prioritize lowering your credit utilization to below 30 percent and clearing up any late payment records. It's also better to avoid opening new cards or taking out large loans right before applying.

DTI should also be considered. According to the Consumer Financial Protection Bureau, the backend DTI should be below 43 percent, while general loans typically range from 36 to 45 percent. For housing costs alone, a frontend DTI of below 28 percent is ideal.

There is a specific order to increase approval rates. First, reduce existing debt to lower your DTI. Get pre-approved. Use pay stubs and tax returns to reliably document your income. Avoid changing jobs or taking out new loans before closing. Also, keep some reserves set aside.

Tax considerations are also important. The average effective property tax rate in California is 0.71 percent. Based on Monterey's home value, this translates to about $8,381 annually in property taxes. This can vary depending on the county and assessment timing.

The CalHFA MyHome Assistance Program is also available in Monterey County. This program provides first-time homebuyers with up to 3.5 percent of the home price as a deferred second loan. It is repaid at the time of sale or refinancing. Income limits vary by county, so it's essential to check directly before applying. Since a second loan is involved, it must also be factored into the DTI calculation.

The school districts in the Monterey area are of significant interest among Korean families. Neighborhoods with high GreatSchools ratings often see listings sell quickly. School district boundaries change frequently, so it's advisable to verify the assigned school for a specific address before signing a contract.

If you are moving from another state, be aware that California's property tax system differs from that of your previous residence. Under Prop 13, property taxes are based on the purchase price at the time of acquisition, with limits on future increases, unlike states that reassess annually. Insurance rates and closing procedures also vary by state, so it's wise to confirm details with a real estate professional in advance. In a fast-moving market like Monterey, making an offer without pre-approval can put you at a disadvantage in negotiations, making it especially important to secure pre-approval before determining your down payment percentage.

A single credit score can determine your interest rate, and a single interest rate can affect your monthly payment. Before deciding on the down payment amount, check your credit score first. Even with the same conditions, the difference in monthly burden due to a single credit score can be more significant than you might think. This article is not investment or legal advice, and it is recommended to consult a professional before making any actual contracts.