Question 1

Can I use an FHA loan to buy in Chico?

Accepted Answer

Yes. Chico home prices generally fall within Butte County's FHA loan limits. Check current limits before assuming — they adjust annually.

Question 2

Which loan has a lower down payment?

Accepted Answer

Both go as low as 3-3.5% down. FHA requires 3.5% at 580+ credit. Conventional can go to 3% for qualifying first-time buyers.

Question 3

Does FHA mortgage insurance ever go away?

Accepted Answer

On most FHA loans, annual MIP stays for the life of the loan. That's the main cost reason to refinance into conventional once you build equity.

Question 4

What credit score do I need for a conventional loan?

Accepted Answer

Most lenders require at least 620. Better rates typically start at 740. Below 620, FHA is the more realistic option.

Question 5

Which loan is easier to get approved for?

Accepted Answer

FHA is more flexible on credit and debt-to-income ratio. Conventional requires stronger financials but costs less long-term for qualified borrowers.

Question 6

Can I switch from FHA to conventional later?

Accepted Answer

Yes — refinancing into conventional once you hit 20% equity removes mortgage insurance entirely. Many Chico buyers start FHA and refinance later.

Conventional vs FHA Loans in Chico, CA