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in Colusa, CA
Most Colusa buyers choose between conventional and FHA loans. Both finance single-family homes and condos, but they differ sharply on down payments, mortgage insurance, and credit requirements.
Conventional loans reward strong credit with lower costs. FHA loans accept weaker credit but add ongoing insurance premiums that can inflate your monthly payment by hundreds of dollars.
Conventional loans require 3% down for first-time buyers and 5% for repeat buyers. You need at least 620 credit, though 740+ gets the best pricing.
Mortgage insurance drops off automatically once you hit 22% equity. You can also request cancellation at 20% equity, cutting your monthly payment by $100-$300 depending on loan size.
These loans cap at $806,500 in Colusa County for 2025. Lenders allow higher debt ratios if you have strong reserves and credit scores above 700.
FHA loans accept 580 credit scores with just 3.5% down. Borrowers with 500-579 credit can qualify if they put down 10%.
You pay 1.75% upfront mortgage insurance plus 0.55-0.85% annually for the loan's life if you put down less than 10%. On a $300,000 loan, that's $5,250 at closing and $137-$213 per month forever.
FHA loans work well for buyers rebuilding credit after bankruptcy or foreclosure. The program allows co-borrowers who won't live in the home, which helps some buyers qualify.
Credit standards separate these programs most. Conventional requires 620 minimum and prices aggressively based on score. FHA accepts 580 but charges similar rates regardless of credit strength.
Mortgage insurance creates the biggest long-term cost gap. Conventional PMI disappears when you hit 20% equity. FHA insurance continues for 11 years minimum, or for the entire loan term if you put down less than 10%.
Property standards also differ. FHA requires homes to meet stricter safety and livability guidelines. Some Colusa rural properties won't qualify because of well water issues, septic systems, or needed repairs that conventional lenders overlook.
Choose FHA if your credit sits below 640 or you can't document stable income for conventional underwriting. The lower credit barrier outweighs the lifetime mortgage insurance cost when you need access now.
Choose conventional if you have 640+ credit and can manage 3-5% down. You'll save thousands over five years by eliminating mortgage insurance once you build equity.
Run both options with actual rate quotes. I see many Colusa buyers assume FHA costs less because of the low down payment, then realize the insurance premium inflates their payment $150-$200 above a conventional loan.
Yes, once you hit 20% equity and your credit improves. Most borrowers refinance within 3-5 years to drop FHA mortgage insurance and lower their payment.
Rates run nearly identical for borrowers with 680+ credit. FHA sometimes edges ahead for scores between 580-679 since conventional pricing penalizes lower credit harder.
Yes, but FHA caps seller concessions at 6% of purchase price. Conventional allows up to 9% with 20% down, or 6% with lower down payments.
No. FHA requires owner occupancy within 60 days. Conventional allows investment properties but requires 15-25% down and charges higher rates.
FHA may require repairs before closing for safety issues. Conventional lenders typically allow cosmetic issues and only flag structural or safety problems.