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in Alhambra, CA
Most Alhambra buyers default to FHA because they assume it's their only option with less than 20% down. That's wrong—conventional loans now accept 3% down and often cost less over time.
The choice between these two affects your monthly payment, upfront costs, and how much equity you keep. Small differences in mortgage insurance structure create big dollar gaps across a 30-year loan.
Conventional loans come from private lenders with terms set by Fannie Mae and Freddie Mac. You need 620 minimum credit, though 700+ unlocks the best pricing.
Down payment starts at 3% for first-timers, 5% for repeat buyers. Put down 20% and you skip mortgage insurance entirely—FHA can't match that.
Loan limits hit $806,500 in Los Angeles County for 2024. Above that threshold you need jumbo financing with stricter requirements.
FHA loans let you buy with 580 credit and 3.5% down. The government insures your loan, so lenders accept higher risk profiles that conventional underwriting rejects.
You pay 1.75% upfront mortgage insurance plus annual premiums between 0.55% and 1.05%. That annual cost never cancels unless you refinance to conventional.
Sellers can contribute up to 6% toward your closing costs—double the conventional limit. That flexibility helps if you're cash-tight after the down payment.
Mortgage insurance is the big cost separator. FHA charges 1.75% upfront plus lifelong monthly premiums. Conventional charges nothing upfront and cancels monthly PMI at 20% equity.
On a $600,000 Alhambra purchase, FHA's upfront fee alone costs $10,290. Conventional with 5% down pays zero upfront and drops PMI once you hit 80% loan-to-value.
Credit scoring works differently too. FHA rates barely change between 620 and 740 scores. Conventional pricing improves dramatically as your score climbs—a 760 score can save 0.5% in rate.
Choose FHA if your credit sits below 640 or you've had recent bankruptcy or foreclosure. The forgiving underwriting outweighs the higher insurance costs when conventional won't approve you.
Pick conventional if you score 680+ and can manage 5% down. You'll pay less monthly and build equity faster without permanent insurance eating your gains.
Run the numbers both ways before deciding. A $600,000 loan with FHA costs roughly $350 more monthly than conventional at 10% down—that's $126,000 over 30 years.
Yes, once you hit 20% equity and 620+ credit you can refinance to conventional. This removes the permanent FHA mortgage insurance.
Both work if the condo is FHA-approved. Conventional offers more flexibility with non-warrantable condos that FHA won't touch.
No, both use the same 43-50% debt-to-income limits. FHA actually allows slightly higher ratios with compensating factors.
On a $570,000 loan, eliminating FHA insurance at 20% equity saves roughly $400 monthly. That's $4,800 yearly you keep as equity.
Yes, sellers can contribute 6% toward FHA costs versus 3% for conventional. That extra help matters when cash reserves run thin.