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in Coalinga, CA
Coalinga buyers usually face a clear choice between conventional and FHA financing. Your credit score and down payment size determine which path makes sense.
Most first-time buyers in Fresno County lean toward FHA for the 3.5% down payment. Repeat buyers with stronger credit often save money going conventional.
Conventional loans require no mortgage insurance once you hit 20% equity. That's a big monthly savings compared to FHA's lifetime premium.
You need 620+ credit for most conventional programs. Stronger scores unlock better rates and lower down payment options like 3% programs for first-timers.
Debt-to-income limits are stricter on conventional loans. Most lenders cap you at 45% DTI, though some go to 50% with strong compensating factors.
FHA loans accept 580 credit scores with just 3.5% down. You can even qualify at 500 credit if you put down 10%, though most lenders set their own higher minimums.
The trade-off is permanent mortgage insurance. You pay 1.75% upfront plus 0.55-0.85% annually for the life of the loan unless you refinance out later.
FHA allows higher debt ratios than conventional. You can stretch to 50-57% DTI with strong credit or substantial cash reserves, useful in tight budget scenarios.
Mortgage insurance is the biggest cost difference. FHA charges it forever, while conventional PMI cancels at 20% equity—potentially saving you $200+ monthly once you hit that threshold.
Credit requirements split these programs apart. FHA accepts 580 scores; conventional starts at 620 but rewards higher scores with significantly better pricing.
Down payment flexibility varies. FHA's 3.5% beats conventional's standard 5%, but conventional offers 3% programs for first-timers that compete directly with FHA.
Property standards matter more on FHA. The appraisal scrutinizes repairs and safety issues that conventional loans often overlook, which can kill deals on fixer properties.
Pick FHA if your credit sits below 640 or you're stretching to qualify. The easier approval and lower down payment offset the lifetime mortgage insurance cost early on.
Go conventional if you have 680+ credit and can manage 5% down. You'll pay less over time once PMI drops, and you avoid FHA's strict property condition requirements.
Plan your exit strategy on FHA. Many buyers use it to get in the door, then refinance to conventional once they build equity and improve their credit profile.
Yes, most borrowers refinance to conventional once they hit 20% equity and their credit improves. This eliminates the lifetime FHA mortgage insurance premium.
FHA's 1.75% upfront mortgage insurance premium typically makes it more expensive to close than conventional. You can roll it into the loan amount though.
Generally yes, because FHA appraisals scrutinize property condition more closely. Conventional deals face fewer repair-related delays in rural Fresno County.
You'll see the steepest rate improvements from 680 to 740 credit. Above 740, pricing gains level off significantly.
Yes, both allow gift funds from family members. FHA is slightly more flexible about the source and documentation requirements for gifts.