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. I’m known as a creative mortgage broker: when a bank says no, I find the lender and the loan structure that can say yes. Call (800) 239-1103.
The California FAIR Plan is the state’s insurance safety net — the policy you get when no standard carrier will write your home. It has become the main option for a lot of California homeowners in fire-exposed areas. If you’re buying or refinancing and the FAIR Plan is what’s available, you need to know three things: what it actually covers, where its limits are, and what your lender will need on top of it. Get those right early and the loan closes. Get them wrong and you find out in the last week of escrow.
What Is the California FAIR Plan?
FAIR stands for Fair Access to Insurance Requirements. The California FAIR Plan Association isn’t a government agency. It’s an association that insurers licensed to write property insurance in California are required by law to belong to, and they share in its results roughly in proportion to their market share. Its job is to offer basic property coverage to owners who can’t find it in the regular market.
The plan was created in 1968, when its focus was urban properties that insurers wouldn’t cover after that decade’s riots. Today it is overwhelmingly a wildfire backstop, and it has grown fast. As of June 2026 the FAIR Plan reported 696,562 policies in force — up 8% from September 2025 and up 157% from September 2022.
What the FAIR Plan Covers — and What It Doesn’t
The FAIR Plan dwelling policy is a named-peril policy. It pays only for damage caused by the specific perils listed, and several of the coverages you’d expect are options you have to choose and pay for.
| Coverage | FAIR Plan dwelling policy | Notes |
|---|---|---|
| Fire, lightning, internal explosion, smoke | Included (basic perils) | The core of the policy |
| Windstorm, hail, explosion, riot, aircraft, vehicles, volcanic eruption | Optional (Extended Coverage) | Lenders need windstorm and hail covered — select this or cover it with a DIC policy |
| Vandalism and malicious mischief | Optional | Extra premium |
| Other structures (detached garage, fences) | Optional | Up to 10% of the dwelling limit, or a separate limit |
| Personal property / contents | Optional | Theft is excluded |
| Fair rental value | Optional | Much narrower than a standard homeowner’s “loss of use” coverage |
| Replacement cost on the dwelling | Optional | Without it, claims are paid at actual cash value (after depreciation) |
| Theft | Not covered | Needs a DIC policy |
| Water damage (burst pipes, leaks) | Not covered | Needs a DIC policy |
| Personal liability, medical payments to others | Not covered | Needs a DIC or separate liability policy |
| Earthquake, flood | Not covered | Separate policies, as with any homeowner’s policy |
That’s why nearly everyone on the FAIR Plan also carries a Difference in Conditions (DIC) policy — the “wrap” policy — from a different insurer to pick up theft, water damage, liability and additional living expenses. I cover how wrap policies work, where to get them and how lenders treat them in FAIR Plan Wrap Policies and Your Mortgage.
FAIR Plan Coverage Limits
The FAIR Plan’s maximum residential dwelling limit is $3,000,000 per location. The Insurance Commissioner ordered the increase from $1.5 million, effective April 1, 2020. Other structures and fair rental value are generally tied to the dwelling limit (commonly up to 10% of it) or scheduled separately.
When does the $3 million limit matter for your mortgage?
- Conforming loans: rarely. The largest conforming loan in California in 2026 is $1,249,125 in high-cost counties. Fannie Mae also no longer requires lenders to document a replacement cost estimate on a one- to four-unit home. A policy written on a replacement cost basis is considered sufficient. The coverage terms matter more than the dollar cap.
- Jumbo loans: it can matter. Jumbo lenders set their own coverage rules, and some want dwelling coverage at least equal to the loan amount or an estimated replacement cost. On a large custom home in Marin, the Oakland hills or coastal Los Angeles, $3 million may not get there. The fix is either excess coverage above the FAIR Plan limit or a lender whose rules fit the coverage you can get.
Don’t skip the replacement cost option
By default, a FAIR Plan dwelling claim is settled at actual cash value, which deducts depreciation. On an older home that can leave a big gap between the check and the cost to rebuild. The policy offers dwelling replacement cost as an option. Under the policy terms, it pays without depreciation when your coverage is at least 80% of the full reconstruction cost. Fannie Mae requires coverage on a replacement cost basis (roofs are the one exception), so for a conforming loan this option isn’t optional in practice. Ask your insurance broker to confirm it’s on the declarations page.
Is the FAIR Plan Enough for Your Lender?
Usually not by itself — but not for the reason most people assume.
- Fannie Mae accepts FAIR Plan policies. Its Selling Guide specifically allows coverage from a state FAIR plan when standard insurance isn’t available.
- The missing perils are the problem. Fannie Mae requires coverage for fire or lightning, explosion, windstorm, hail, smoke, aircraft, vehicles, and riot or civil commotion, on a “special” form or equivalent. The basic FAIR Plan policy doesn’t cover windstorm or hail, so you need the Extended Coverage option, a DIC policy that covers those perils, or both.
- Deductible: the maximum deductible is 5% of the coverage amount, including separate wildfire or windstorm deductibles.
- Liability: Fannie Mae’s one- to four-unit rules don’t list personal liability, but some lenders require it, and you should carry it anyway.
- Jumbo lenders can add their own rules: admitted-carrier-only (which can rule out surplus lines DIC policies), higher insurer ratings, coverage-amount minimums, lower LTV in certain fire zones, or a prepaid first-year premium at closing.
Condos: When the HOA Goes to the FAIR Plan
For condos, the HOA’s master policy covers the building. Fannie Mae requires that master policy to cover a long list of perils on a special form or equivalent. If it excludes or limits a required peril, the HOA has to buy separate coverage for that peril. When an HOA gets non-renewed and moves to the FAIR Plan without filling the gaps, units in the project may no longer qualify for conventional financing. That affects every buyer and every owner who wants to refinance. Unit owners still carry their own HO-6 “walls-in” policy. If you’re buying a condo in a fire-exposed area, get the master policy declarations early. If the project doesn’t meet agency rules, a non-warrantable condo loan is often the way through. The August 2026 Fannie Mae condo changes are covered in this update.
What FAIR Plan Coverage Costs
I’m not going to publish a price table — FAIR Plan and DIC premiums vary too much by property to make one meaningful, and FAIR Plan rates are subject to change. The premium depends on location and fire exposure, construction type, roof, brush clearance and the coverages and limits you pick. Add the DIC policy on top. What I can tell you is how the premium hits your mortgage: it goes into your monthly housing payment and your debt-to-income ratio. At a 30-year fixed rate around 7%, each additional $600 a month in insurance reduces the loan you can support by roughly $90,000. Always qualify using real quotes.
How to Prepare: FAIR Plan + Mortgage in Escrow
Step 1 — Get quotes before you make an offer. Check the property’s fire hazard severity zone, ask the listing agent what insurance the seller carries, and get FAIR Plan and DIC quotes early. Know the total annual premium before you settle on a price.
Step 2 — Tell your loan officer up front. If coverage will be FAIR Plan + DIC, say so at application. That’s when to confirm the lender accepts the structure and what it requires: perils, replacement cost, deductible, insurer rating and, for jumbo, admitted vs. surplus lines.
Step 3 — Match the lender to the coverage. With a bank, you get one set of insurance rules. As a broker, I can check several lenders’ requirements and put you with one that fits the coverage you can actually get. I also introduce clients to independent insurance brokers I know who place FAIR Plan + DIC coverage regularly. I don’t sell insurance and I don’t take referral fees.
Step 4 — Deliver both declarations pages to escrow. Both the FAIR Plan and the DIC policy should name the lender as mortgagee, with effective dates that cover closing.
Frequently Asked Questions
What does the California FAIR Plan cover?
The FAIR Plan dwelling policy is a named-peril policy. It always covers fire, lightning, internal explosion and smoke. Extended Coverage (windstorm, hail, explosion, riot, aircraft, vehicles, volcanic eruption), vandalism, other structures, personal property, fair rental value and replacement cost are optional. It does not cover theft, water damage or personal liability; most owners add a Difference in Conditions (DIC) policy for those.
What is the FAIR Plan coverage limit?
The maximum residential dwelling limit is $3,000,000 per location. The California Insurance Commissioner ordered the increase from $1.5 million, effective April 1, 2020. The limit rarely matters for conforming loans, but it can matter for jumbo lenders that require dwelling coverage at least equal to the loan amount or an estimated replacement cost.
Can I get a mortgage with only FAIR Plan insurance?
Usually not with the basic policy alone. Fannie Mae accepts state FAIR plan policies, but it requires coverage on a replacement cost basis for perils including windstorm and hail, which the basic FAIR Plan policy does not include. Adding the Extended Coverage option and/or a DIC policy, with the replacement cost option on the dwelling, normally solves it. Jumbo lenders may have additional requirements.
Does the FAIR Plan pay replacement cost?
Only if you select the dwelling replacement cost option. Otherwise claims are paid at actual cash value, which deducts depreciation. Under the policy terms, replacement cost applies when your coverage is at least 80% of the full reconstruction cost. Because Fannie Mae requires replacement cost coverage (roofs excepted), make sure the option appears on your declarations page.
What happens to my condo loan if the HOA switches to the FAIR Plan?
Fannie Mae requires the HOA’s master policy to cover a specific list of perils. If the master policy excludes or limits any of them, the HOA must obtain separate coverage for the gap, or units may not qualify for conventional financing. If that happens, a non-warrantable condo loan from a portfolio or non-QM lender is often the alternative.
Related Resources
- FAIR Plan Wrap Policies and Getting a Mortgage in a Fire Zone
- California Jumbo Loans
- Non-Warrantable Condo Mortgages
- Fannie Mae’s August 2026 Condo Rule Changes
- 2026 California Conforming Loan Limits
- Debt-to-Income Ratio for a California Mortgage
- Marin County Mortgage Broker
Official Sources & References
- California FAIR Plan — Dwelling Policy
- California FAIR Plan — Dwelling Property Policy form (effective 2026)
- California FAIR Plan — Key Statistics & Data
- California Department of Insurance — FAIR Plan order raising the dwelling limit to $3 million (2019)
- Fannie Mae Selling Guide B7-3-01 — General Property Insurance Requirements
- Fannie Mae Selling Guide B7-3-02 — One- to Four-Unit Property Insurance
- Fannie Mae Selling Guide B7-3-03 — Master Property Insurance for Project Developments
- Fannie Mae Lender Letter LL-2026-03
- United Policyholders — The Lowdown on the California FAIR Plan
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
