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in Hanford, CA
Most Hanford buyers ask whether they should go conventional or FHA. The answer depends on your down payment, credit score, and how long you plan to own the home.
FHA loans get you in the door with less cash upfront. Conventional loans cost less over time if you can put down 20%. Your situation determines which makes financial sense.
Conventional loans work best when you have solid credit and money saved. You need a 620 credit score minimum, though 740+ gets the best rates.
Put down 20% and you skip mortgage insurance entirely. Drop below 20% and you pay PMI until you hit that equity threshold. PMI cancels automatically once you reach 78% loan-to-value.
Loan limits for conforming conventional loans give you room in most Hanford neighborhoods. These loans follow Fannie Mae and Freddie Mac guidelines, which most lenders know inside out.
FHA loans let you buy with 3.5% down if your credit score hits 580. Scores between 500-579 require 10% down. These loans exist specifically for buyers who need lower credit and down payment barriers.
You pay two types of mortgage insurance with FHA. An upfront premium of 1.75% of the loan amount rolls into your mortgage. Annual premiums run 0.55% to 0.85% depending on your loan size and down payment.
FHA mortgage insurance stays for the life of the loan if you put down less than 10%. Put down 10% or more and it drops after 11 years. This long-term cost adds up compared to conventional PMI.
Credit score creates the biggest split. Conventional wants 620 minimum and rewards high scores with better rates. FHA accepts 580 and treats most approved borrowers similarly on rate.
Mortgage insurance works completely differently. Conventional PMI cancels when you hit 22% equity or request removal at 20%. FHA insurance typically lasts forever unless you refinance or started with 10%+ down.
Down payment flexibility favors FHA for cash-strapped buyers. Conventional requires more upfront but saves you money monthly once you clear 20% down. Run the numbers over your expected ownership timeline.
Choose FHA if you have under 10% saved for down payment or credit below 640. You pay more over time but get into a home now. Many Hanford buyers use FHA as a stepping stone, then refinance to conventional after building equity.
Go conventional if you have 10%+ down and credit above 680. You avoid upfront fees and your mortgage insurance eventually disappears. The long-term savings matter most if you plan to own more than five years.
Property condition also matters. FHA requires homes to meet specific safety and livability standards. Conventional lenders care less about cosmetic issues. Some Hanford fixer-uppers only qualify for conventional financing.
Yes, most borrowers refinance to conventional once they hit 20% equity and their credit improves. This eliminates the lifetime mortgage insurance FHA charges.
Conventional rates run lower for borrowers with 740+ credit and 20% down. FHA rates stay competitive for buyers with scores in the 580-680 range. Rates vary by borrower profile and market conditions.
Yes, but FHA requires the condo complex to meet FHA approval standards. Conventional loans have fewer restrictions on which condo projects qualify.
You pay 1.75% upfront plus 0.55% to 0.85% annually. On a $300,000 loan, that's $5,250 upfront and roughly $1,650 to $2,550 per year ongoing.
Both loan types allow gift funds from family members. FHA accepts gifts for the entire down payment while conventional may require some of your own funds depending on the down payment amount.