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in Arcadia, CA
Arcadia buyers face a real choice between conventional and FHA financing. Both get deals closed, but they work very differently for credit profiles and upfront cash.
The loan you pick affects your monthly payment, down payment requirement, and mortgage insurance costs. Choose wrong and you'll pay thousands extra over the life of the loan.
Conventional loans demand 620+ credit and typically 5-20% down. Lenders price these based on your profile—stronger credit means better rates.
Mortgage insurance drops off at 20% equity with conventional financing. If you put 20% down from the start, you skip PMI entirely and save $100-300 monthly.
These loans work best for borrowers with solid credit and cash reserves. Debt-to-income limits run stricter than FHA, usually capping at 45-50%.
FHA accepts 580 credit scores with just 3.5% down. You'll pay 1.75% upfront mortgage insurance plus 0.55-0.85% annual premium that never drops off.
The upfront premium gets rolled into your loan amount—you don't need cash for it. But that annual premium sticks for the loan's life on most FHA purchases.
FHA allows higher debt ratios and more flexible income documentation. Gift funds and down payment assistance programs work easily with FHA guidelines.
Credit requirements separate these programs most. Conventional needs 620 minimum while FHA goes to 580—that 40-point gap opens homeownership to different buyers.
Mortgage insurance costs flip the equation. FHA charges upfront and annual premiums that never cancel. Conventional PMI costs less monthly and drops off at 20% equity.
Down payment flexibility favors FHA at 3.5%, but conventional hits 5% for many lenders. The real cost difference shows up in monthly insurance premiums, not the initial down payment.
Pick FHA if your credit sits below 640 or you need maximum debt ratio flexibility. The permanent mortgage insurance costs more long-term, but it gets you approved now.
Choose conventional with 680+ credit and 10%+ down payment. You'll pay less in insurance and qualify for better rates that save thousands over five years.
Plan to refinance FHA to conventional once you hit 20% equity. That move drops the permanent mortgage insurance and typically cuts your monthly payment $150-400.
Conventional requires 620 minimum while FHA accepts 580 with 3.5% down. Most Arcadia conventional approvals happen at 680+ for competitive pricing.
FHA charges 1.75% upfront plus 0.55-0.85% annually for the loan life. Conventional PMI runs 0.3-1.5% annually and cancels at 20% equity automatically.
Yes, some conventional programs allow 3% down for first-time buyers. You'll pay higher PMI rates but avoid FHA's permanent mortgage insurance structure.
Both close in 21-30 days typically. Conventional underwriting runs stricter on income documentation, while FHA appraisals require more property condition items.
Absolutely, once you reach 20% equity. Dropping FHA mortgage insurance saves $150-400 monthly and pays for refinance costs within 12-18 months.