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in Danville, CA
Choosing between conventional and FHA financing affects your down payment, monthly costs, and long-term expenses. Both loan types serve Danville homebuyers well, but they work differently.
Conventional loans offer lower overall costs for buyers with strong credit and larger down payments. FHA loans open doors for buyers with limited savings or credit challenges.
Understanding these differences helps you select the right path for your Danville home purchase. Your credit score, down payment, and financial goals determine which option saves you the most money.
Conventional loans require higher credit scores—typically 620 or above—but reward strong borrowers with better terms. Down payments start at 3% for first-time buyers and 5% for repeat purchasers.
These loans avoid upfront mortgage insurance premiums entirely. Private mortgage insurance (PMI) drops off automatically once you reach 22% equity, reducing your monthly payment.
Conventional financing often provides lower total costs over the loan's lifetime. Rates vary by borrower profile and market conditions, but qualified buyers typically secure competitive pricing.
FHA loans accept credit scores as low as 580 with just 3.5% down. Borrowers with scores between 500-579 can qualify with 10% down, making homeownership accessible to more people.
These government-insured mortgages require an upfront premium of 1.75% of the loan amount, typically rolled into your loan balance. You'll also pay annual mortgage insurance premiums for the loan's duration.
FHA financing allows higher debt-to-income ratios than conventional loans. This flexibility helps buyers with student loans, car payments, or other monthly obligations qualify for Danville homes.
Down payment requirements differ substantially. Conventional loans require 3-20% depending on your situation, while FHA loans start at 3.5% with lower credit scores.
Mortgage insurance works differently between these options. FHA charges both upfront (1.75%) and annual premiums that last the loan's lifetime with less than 10% down. Conventional PMI costs less monthly and cancels automatically at 22% equity.
Credit standards separate these programs significantly. Conventional loans demand stronger credit profiles but reward them with better pricing. FHA accepts lower scores and higher debt ratios, trading accessibility for higher long-term costs.
Choose conventional financing if your credit score exceeds 680 and you have at least 5% down. You'll pay less over time and eliminate mortgage insurance sooner, saving thousands over the loan term.
FHA makes sense when your credit score sits below 680 or you need flexible debt ratio treatment. The easier qualification opens doors, even though insurance costs persist throughout the loan.
Your specific situation determines the best choice. Buyers with 10-20% down and strong credit almost always benefit from conventional financing. Those with limited savings or credit challenges find FHA more accessible despite higher lifetime costs.
Yes, refinancing from FHA to conventional eliminates mortgage insurance once you have 20% equity. This strategy starts with accessible FHA terms then reduces costs as your equity grows.
Both loan types take similar time to close, typically 30-45 days. Processing speed depends more on your documentation readiness and lender efficiency than the loan type itself.
FHA loan limits cap at $1,149,825 in Contra Costa County. Higher-priced Danville homes may require conventional financing if they exceed this threshold, regardless of your credit profile.
FHA charges 1.75% upfront plus 0.55-0.85% annually. Conventional PMI ranges from 0.3-1.5% annually with no upfront cost, and cancels at 22% equity. Rates vary by borrower profile and market conditions.
FHA requires owner occupancy—no investment properties allowed. Conventional loans work for investment properties but require larger down payments, typically 15-25% depending on the property type.