Almost 1 in 10 Buyers Just Switched to an ARM. What the Loan Type Behind an Offer Tells a California Seller

Two offers land on your California home at the same price. One buyer is putting 30 percent down on a conventional loan. One is using FHA with a small down payment. The third just moved to an adjustable-rate mortgage because the fixed-rate quote crossed 7 percent. Today’s mortgage data says that third buyer is getting more common — and the loan behind an offer decides much of what happens after you accept it.

What the new numbers say

• ·The Mortgage Bankers Association’s Weekly Applications Survey, released September 23, 2026 for the week ending September 18, put the average 30-year fixed contract rate on conforming loans at 7.12%, up from 6.97% (as reported by Mortgage Professional America, September 23, 2026)
• ·MBA chief economist Mike Fratantoni: “Mortgage rates vaulted higher last week, with the 30-year fixed rate at 7.12% — the highest level since May 2024”
• ·The ARM share of applications rose to 9.8% from 8.4% the week before, and Fratantoni added: “With fixed rates much higher, more borrowers opted for ARMs” (MBA)
• ·The 5/1 ARM contract rate averaged 6.10%, down from 6.23%, and the 30-year jumbo rate ran 7.15% (MBA)
• ·Purchase applications fell 1% seasonally adjusted, and the refinance index sat 62% below a year earlier (MBA)
• ·FHA applications were 16.7% of the total, VA 12%, USDA 0.6% (MBA)
• ·Freddie Mac’s separate Primary Mortgage Market Survey put the 30-year fixed at 6.95% on September 17, 2026 — different survey, different week

What the loan type actually changes

Price is the headline of an offer. Financing is the machinery underneath it, and it touches how the property gets inspected, how long the file takes, and how likely it is to fund.

FHA and VA appraisals are not only opinions of value. FHA appraisals apply HUD’s Minimum Property Requirements under Handbook 4000.1, and VA appraisals apply the VA’s own Minimum Property Requirements in Pamphlet 26-7, Chapter 12. Both direct the appraiser to look at condition and safety, not just comparable sales — so a deferred item a conventional appraiser would pass over can come back as something to correct before the loan funds.

An ARM is different again. The Consumer Financial Protection Bureau describes it plainly: the rate is fixed for an introductory period, then adjusts on a schedule within caps set in the note. That is the buyer’s risk to carry, not yours. What it means for your sale is that they qualified under different numbers than a fixed-rate buyer at 7.12%.

None of this makes a loan type good or bad. It makes them different timelines with different failure points — worth knowing before you compare two offers as if price were the only variable.

One line worth not crossing

Understanding financing is not the same as screening people by it. Marketing that announces a preference — “conventional only,” “no FHA or VA” — is exactly the wording that draws fair housing scrutiny, and California’s Fair Employment and Housing Act lists veteran or military status among protected characteristics in housing (Government Code section 12955, as amended by SB 222, 2019). We are a brokerage, not your attorney, and none of this is legal advice — ask a California real estate lawyer.

The practical version is simpler: evaluate offers on their terms, and get the property into shape so financing is a smaller question for everyone.

How to prepare so any loan works

• ·Handle health-and-safety condition items before you list. They are the ones most likely to surface in an FHA or VA appraisal, and cheaper to fix on your schedule than on a lender’s.
• ·Have disclosures finished before the first offer, not after — the list is in the disclosures you’ll actually need.
• ·Ask what is behind the pre-approval: which lender, which loan product, and whether income and assets were verified or just stated.
• ·Read the appraisal contingency and the loan contingency as separate risks.
• ·Budget for the second negotiation over credits and repairs (the pattern).
• ·Price to closings from the last 60 to 90 days — at these rates buyers shop by monthly payment (the mechanics).

Your local market sets the pace, not the national one

How much any of this slows you down depends on where in California you are selling. The California Association of Realtors’ August report, released September 16, 2026, put the statewide median time on market at 28 days and the Unsold Inventory Index at 3.7 months (C.A.R.).

Take the Bay Area as the concrete case: in that report the San Francisco Bay Area ran 22 days and 2.6 months, with a regional median of $1,272,000 — tighter than the state as a whole. Sacramento, Fresno, Riverside and San Diego each have their own version of those numbers, and yours is the one that describes your sale.

The one number that does not depend on your buyer’s lender

You do not choose the 30-year rate, or which loan your buyer walks in with. You do choose what selling costs you.

A traditional listing-side commission of about 3% runs roughly $30,000 on a $1,000,000 home. Guided Home Realty lists your home on the same MLS every agent uses, with a licensed California broker, for a flat $999 at MLS launch (non-refundable) plus $5,000 from escrow when it closes — $5,999 total instead of a percentage. Against a traditional ~$30,000 commission, that is $24K+ you keep, whichever loan your buyer brings.

See real verified results, then start with a free, no-obligation estimate of your home’s value.