I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. Call (800) 239-1103.
California’s high-fire-risk zones cover millions of homes across virtually every region of the state — and buying or refinancing in one is increasingly complicated. The insurance crisis is the most visible challenge, but it’s not the only one. Lenders have added overlays, appraisers are flagging insurability as a condition, and some loan programs have added explicit restrictions on Tier 2 and Very High Fire Hazard Severity Zone (VHFHSZ) properties. This guide covers exactly what lenders require in 2026 and how to navigate the financing process on a California fire zone property.
California Fire Hazard Zones: What They Are and Where They Apply
CAL FIRE designates properties across California using Fire Hazard Severity Zones (FHSZ) — ratings that reflect the fire risk based on fuel load, fire history, terrain, wind patterns, and other factors. The designations are: Moderate, High, and Very High (in State Responsibility Areas) plus a separate “Very High” designation for Local Responsibility Areas used by some jurisdictions.
| Region | FHSZ Designation | Mortgage / Insurance Impact |
|---|---|---|
| Pacific Palisades, Malibu, Topanga Canyon | Very High (SRA/LRA) | Severe — mass non-renewals post-Jan 2025; jumbo lenders adding overlays |
| Altadena, Pasadena Foothills, Arcadia Hills | Very High (LRA) | Severe — post-fire; many lenders require full property inspection |
| Marin County — Mill Valley, Fairfax, San Rafael hills | Very High (SRA) | High — FAIR Plan prevalent; some lenders restricting LTV |
| Oakland Hills, Berkeley Hills, Moraga, Orinda | Very High (SRA/LRA) | High — insurance and lender overlay concerns |
| Sonoma County — Healdsburg, Glen Ellen, Guerneville | High to Very High | High — post-2017/2019 fire legacy; private insurance very thin |
| Santa Cruz Mountains — Boulder Creek, Scotts Valley | High to Very High | Moderate-High — CZU Fire legacy; surplus lines common |
| San Diego — Rancho Santa Fe, Ramona, Julian | High to Very High | Moderate — rural SD has active E&S market |
| Foothill communities statewide — Ventura, San Bernardino | Moderate to Very High | Varies by specific location and recent fire history |
What Conforming Lenders (Fannie Mae) Require in Fire Zones
Fannie Mae itself has not added fire-zone-specific restrictions to its selling guidelines — the agency’s position is that insurability is a local market condition to be handled at the lender and appraiser level. In practice, this means conforming loans in fire zones are still available, but with these practical requirements:
Hazard insurance at or above the lower of outstanding loan balance or full replacement cost. This is standard Fannie Mae, but it becomes challenging when the FAIR Plan’s $3M cap doesn’t cover the replacement cost on high-value properties.
Liability coverage required. The FAIR Plan alone does not satisfy this — a wrap policy is needed. Most conventional lenders accept FAIR Plan + wrap combination.
Appraisal insurability commentary. Fannie Mae appraisers in high-fire-risk areas are increasingly flagging insurance conditions as part of their report. If the appraiser notes “insurability concerns” or “subject to ability to obtain hazard insurance,” the lender will want documentation of actual insurance coverage before closing.
Lender overlays. Individual lenders selling to Fannie Mae can add their own requirements beyond the GSE guidelines. Some lenders have added overlays restricting LTV on Very High FHSZ properties, requiring 30% down in certain zip codes, or requiring third-party inspection of defensible space and brush clearance.
What Jumbo Lenders Require in Fire Zones
Jumbo portfolio lenders — who hold loans on their own books — have significantly more variability in their fire zone requirements, and the restrictions have tightened substantially since 2023:
| Jumbo Lender Requirement (common) | Impact |
|---|---|
| Admitted carrier only (no surplus lines) | Rules out many wrap policies; limits insurer options significantly |
| Minimum AM Best A- rating on insurer | Excludes some E&S carriers; Lloyd’s syndicates vary in eligibility |
| 100% replacement cost coverage required | FAIR Plan $3M cap may be insufficient on high-value properties |
| Maximum LTV reduction in severe fire zones (e.g., 70% max LTV) | Requires larger down payment; affects purchasing power |
| Property inspection for defensible space | Adds to timeline; brush clearance work may be required pre-closing |
| Full property insurance escrow at closing | Full annual premium due at close; affects cash-to-close |
| Blanket exclusion on specific zip codes post-fire | Some lenders have added zip-code exclusions in areas with 2025 fire activity |
DiVita Home Finance works with jumbo investors who have specific fire zone approval processes — investors who have reviewed California fire risk and built underwriting guidelines that accommodate it, rather than lenders who have simply added broad geographic exclusions. If you’re buying a home above $832,750 (the 2026 baseline conforming limit) in a fire zone, you need a broker with the right jumbo lender relationships.
Non-QM and Portfolio Loans in Fire Zones
Non-QM investors — DSCR lenders, bank statement programs, asset depletion loans — tend to be more flexible on fire zone properties than jumbo conventional lenders, because they’re already underwriting to custom guidelines and reviewing each file individually. DSCR loans for investment properties in fire zones are particularly accessible through the right investors, as long as adequate insurance is in place. Bank statement loans for self-employed buyers in fire zone markets (Marin, Sonoma, Los Angeles foothills) are similarly available through investors who have experience with California fire risk.
The Insurance Timeline Problem in Escrow
One of the most common fire zone escrow problems is timeline mismatch: buyers go under contract expecting to secure insurance quickly, then spend weeks chasing coverage, pushing close of escrow, and potentially losing their rate lock. Surplus lines carriers can sometimes bind coverage faster than admitted carriers, but the process of finding the right broker, getting the right quotes, and confirming lender acceptance still takes time.
Our recommendation: treat insurance as a day-one task, not a day-28 task. Contact insurance brokers the day you go into contract — before the inspection period closes. DiVita’s insurance broker network can often identify coverage options within 48–72 hours of receiving property details, which gives you time to address any issues before they threaten your closing date.
Fire Zone Mortgage FAQ
Will any lender give me a mortgage in a Very High fire zone?
Yes — financing is available in California’s Very High Fire Hazard Severity Zones through conforming, jumbo, and non-QM programs, provided you can obtain adequate insurance coverage. The critical variable is insurance: if you can place a coverage package that satisfies the lender’s requirements, the loan itself is approvable. The challenge is finding the insurance — which is where our broker network comes in.
Do I need more down payment because I’m in a fire zone?
For conforming loans, not necessarily — fire zone location alone doesn’t trigger a higher down payment requirement under Fannie Mae guidelines. Individual lenders may add overlays. For jumbo loans, some lenders do restrict LTV in severe fire zones, requiring 25–30% down rather than 20%. This varies by lender, loan amount, and specific zip code — ask us before assuming a higher down payment is required.
What if the seller can’t get insurance renewed during escrow?
If a seller’s existing policy is non-renewed during escrow, the insurance obligation transfers to the buyer at closing — you’ll need active coverage in place on your name at closing regardless of what happened to the seller’s policy. Start the insurance search the moment you’re in contract; don’t assume the seller’s existing policy status tells you anything about what you’ll be able to obtain.
I’m refinancing in a fire zone and just got non-renewed. What do I do?
A refinance requires active hazard insurance at closing, just like a purchase. If your policy was non-renewed, you need to secure replacement coverage — FAIR Plan + wrap, surplus lines, or another combination — before your refinance can fund. Call us before calling your current lender: we’ll connect you with insurance brokers who can place coverage quickly and confirm the coverage structure is acceptable to your refinance lender.
Related Resources: California Fire Zone Mortgage & Insurance Hub | Complete 2026 Insurance Crisis Guide | CA FAIR Plan Coverage & Limits | Wrap Policies Explained
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
