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in Cerritos, CA
Most Cerritos buyers struggle choosing between conventional and FHA loans. Both work for single-family homes and condos across the city, but they favor different buyer profiles.
Your credit score and down payment determine which loan saves you more. FHA loans help buyers with lower credit get approved, while conventional loans reward strong credit with better rates.
Conventional loans require 620+ credit and at least 3% down. You pay private mortgage insurance under 20% down, but it drops off once you hit 20% equity.
These loans offer the lowest rates for borrowers with 740+ credit. Lenders also cap your debt-to-income ratio at 45-50%, so high earners with clean credit benefit most.
FHA loans accept 580 credit scores with 3.5% down. You can qualify with 500 credit if you put down 10%, which helps buyers rebuilding after credit issues.
You pay two types of mortgage insurance: 1.75% upfront and annual premiums that last the loan's life. FHA allows higher debt ratios up to 57%, giving more flexibility on income requirements.
Credit score creates the biggest split. Conventional needs 620 minimum while FHA accepts 580, but conventional rewards higher scores with rate discounts FHA doesn't offer.
Mortgage insurance works differently. Conventional PMI disappears at 20% equity, but FHA insurance sticks for the loan's full term unless you refinance out later.
Choose FHA if your credit sits between 580-680 or your debt ratios push 50%. The higher rates and permanent insurance cost less than waiting years to improve your credit score.
Pick conventional if you have 700+ credit and can manage 5% down. You'll lock lower rates and drop PMI faster, saving thousands over the loan term.
Yes, refinancing to conventional removes FHA insurance once you hit 20% equity and meet credit requirements. Most borrowers refinance within 3-5 years.
Both take 30-45 days typically. FHA adds an appraisal inspection that can delay closing by a week if repairs are needed.
Most do, but FHA requires the complex to be FHA-approved. Conventional loans have fewer condo restrictions in the area.
740+ unlocks top-tier pricing. Each 20-point drop below 740 costs about 0.25-0.5% in rate on conventional loans.
Rarely. With that much down, conventional loans almost always beat FHA rates and avoid the upfront insurance premium.