Buying a home in Morro Bay
Almost the whole city lies in the Coastal Zone, and the City requires a coastal development permit for every ADU application. The fire, flood and tsunami maps each reach parts of town, and full-home short-term rentals in residential zones are capped.
Morro Bay at a glance
What the public records say about building, insuring and lending here. Each line names the record it was read from.
- Local government
- An incorporated city that issues its own planning, coastal development and building permits.Source: City of Morro Bay, Plan Morro Bay (general plan and coastal land use plan)
- Coastal Zone
- Almost all of the city lies inside it. The City's certified coastal program is Plan Morro Bay together with its zoning code.Source: California Coastal Commission, Morro Bay implementation plan report
- Fire hazard zones
- The State Fire Marshal's map shows Very High, High and Moderate zones.Source: State Fire Marshal, fire hazard severity zone map
- Flooding
- FEMA maps flood zones along creeks in the city, Morro Creek and Chorro Creek among them, and coastal high-hazard zones along the ocean and the bay.Source: FEMA Flood Map Service Center, Morro Bay
- Tsunami
- The State's tsunami hazard map, which the State says is for local planning and not for real estate disclosure, covers the low-lying waterfront, the Embarcadero included.Source: California Geological Survey, tsunami hazard area map for the county
- USDA home loans
- Inside the eligible area on USDA's map.Source: USDA Rural Development, property eligibility map
What a loan meets in Morro Bay
Rules in the public record that can bear on buying in Morro Bay.
Every ADU needs a coastal permit
The City requires a coastal development permit and a building permit for every accessory dwelling unit. The City's guide says ADUs are permitted in zones that allow single family or multifamily homes and may be rented long term, but not as short stay or vacation rentals.
Hazard reports and deed restrictions near the water
Every coastal development permit starts with a site assessment for hazards, and a parcel in a mapped coastal hazard area, the sea level rise overlay or near a geologic hazard needs a full hazards report. A permit on a blufftop or shoreline lot comes with a recorded deed restriction that acknowledges the risk and gives up any future seawall.
Sources:California Coastal Commission, Morro Bay implementation plan report
Water and sewer come before new building
Plan Morro Bay says development is to be approved only where it is first shown to have an adequate water allocation, a sustainable long-term public water supply and adequate wastewater capacity.
Sources:City of Morro Bay, Plan Morro Bay (general plan and coastal land use plan)
Short-term rental permits are capped
A short-term rental needs a City permit, a business license and a transient occupancy tax account before it operates. Full-home rentals in residential zones are capped, have to keep a set distance from the nearest permitted rental, and go on a waiting list over the cap; home-shares and rentals in commercial and mixed-use zones are not capped.
Two State insurance designations
The Department of Insurance lists the Morro Bay ZIP code among the undermarketed ZIP codes in its rules on insurer commitments to increase writing of policies in high-risk wildfire areas. The Morro Bay Fire Department is on the Board of Forestry's Fire Risk Reduction Community list, which insurers' rating plans have to take into account.
Sources:California Department of Insurance, distressed counties and undermarketed ZIP codesCity of Morro Bay, Fire Risk Reduction Community
Loans that come up in Morro Bay
Programs with a rule that touches something on this page, and the rule. Other programs can work here too.
- ADU financing
Every accessory dwelling unit in the city needs the City's coastal development permit as well as a building permit, and it may be rented only for longer stays.
- USDA loan
USDA's map places Morro Bay inside its eligible area, so a USDA loan can be considered here, within USDA's household income limit.
- Construction loan
New building has to show a water allocation and sewer capacity first, and the State's wildfire building standards apply to new homes in the High and Very High fire zones.
Our services in Morro Bay
What each of these means here, from the records this page cites. The service pages explain each in full.
Pre-qualification letter in Morro Bay
In Morro Bay, the listing agent reads your pre-qualification letter beside a timeline the Coastal Zone sets. Almost all of the city lies inside it and the City issues the coastal development permits. If you plan an accessory dwelling unit, or work on a blufftop or shoreline lot, you have a coastal development permit path the letter does not shorten. The State Fire Marshal's map shows Very High, High and Moderate zones. The Department of Insurance lists the Morro Bay ZIP code among its undermarketed ZIP codes. The Morro Bay Fire Department is on the Board of Forestry's Fire Risk Reduction Community list, which insurers' rating plans have to take into account. The insurance premium a lender counts in your payment follows from that market. FEMA's maps show coastal high-hazard zones along the ocean and the bay and flood zones along Morro Creek and Chorro Creek, which bear on that premium as well. Where the price is above the county's conforming limit, your letter has to name a jumbo loan rather than a conventional one. Our letter sets out the program and the amount your file supports, and says plainly that it is no commitment to lend.
Sources:FHFA conforming loan limits by countyCalifornia Coastal Commission, Morro Bay implementation plan reportCity of Morro Bay, accessory dwelling unit guideCalifornia Department of Insurance, distressed counties and undermarketed ZIP codesCity of Morro Bay, Fire Risk Reduction CommunityFEMA Flood Map Service Center, Morro Bay
Investment property in Morro Bay
Morro Bay's rules shape the rent a DSCR lender can count. A short-term rental needs a City permit, a business license and a transient occupancy tax account before it operates. Full-home rentals in residential zones are capped, with a waiting list over the cap and a set distance from the nearest permitted rental. So you cannot assume nightly income on a home in a residential zone; the rent a DSCR lender reads there is the long-term market rent on the appraiser's schedule. An accessory dwelling unit needs the City's coastal development permit as well as a building permit. The City's guide says it may be rented long term but not as a short stay or vacation rental, which is how an ADU you finance to rent is qualified. A home-share, or a rental in a commercial or mixed-use zone, sits outside the cap. That is the one place Morro Bay's rules leave nightly rent open to you as a new owner.
Sources:City of Morro Bay, short-term vacation rentalsCity of Morro Bay, accessory dwelling unit guide
More on the Central Coast:The Central Coast, town by townThe county's loan limitsCentral Coast questions
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This page is general information about buying in Morro Bay, not an offer of credit or a commitment to lend. The records it cites change, and what a lender will do with a file depends on the file.
Tell us about the house in Morro Bay
Start with a few questions about the property and your plans, or call and ask.
No credit pull to get started. This is not a commitment to lend. Equal Housing Opportunity.