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in Claremont, CA
Most Claremont buyers ask us whether they should go conventional or FHA. The answer depends on your down payment size, credit score, and how long you plan to stay in the home.
FHA opens doors for borrowers with 580 credit and 3.5% down. Conventional rewards strong profiles with lower costs and no mortgage insurance after 20% equity.
Conventional loans require 620+ credit and typically 5-20% down. You pay PMI only until you hit 20% equity, then it drops off automatically.
These loans work best for borrowers with solid credit and stable income. Lenders cap debt-to-income at 50%, though most approvals fall below 45%.
Loan limits for Claremont sit at $806,500 for single-family homes in 2025. Above that threshold, you need a jumbo loan with stricter requirements.
FHA loans accept 580 credit with 3.5% down, or 500-579 credit with 10% down. The upfront mortgage insurance (1.75%) gets rolled into your loan amount.
You pay ongoing MIP of 0.55% annually for the loan's entire life if you put down less than 10%. That monthly cost never drops off.
FHA loan limits in Los Angeles County match conventional at $806,500. Debt-to-income can stretch to 57% with strong compensating factors like cash reserves.
The mortgage insurance structure separates these loans. FHA charges 1.75% upfront plus 0.55% annually for life. Conventional charges 0.3-1.5% annually but cancels at 20% equity.
Credit standards differ significantly. Conventional denies most applicants below 620. FHA approves borrowers at 580, sometimes lower with manual underwriting.
Down payment flexibility matters for Claremont's market. FHA's 3.5% minimum beats conventional's typical 5% floor, though both allow higher amounts.
Interest rates on conventional loans run 0.25-0.50% lower for borrowers with 740+ credit. Below 680 credit, FHA rates often win.
Choose FHA if your credit sits below 640 or you have less than 5% down. The upfront and monthly insurance costs hurt, but you get approved where conventional won't touch you.
Go conventional with 680+ credit and 10%+ down. You pay less upfront and your monthly insurance disappears after a few years of appreciation and principal paydown.
Run the numbers on both. We've seen FHA cost $18,000 more over seven years due to lifetime MIP. We've also seen it save buyers with 600 credit from renting another three years.
Yes, once you hit 20% equity and 620+ credit. Most borrowers refinance within 3-5 years to drop the lifetime MIP.
Conventional typically closes 2-3 days faster. FHA appraisals require additional property inspections that add time.
FHA requires homes to meet minimum property standards. Fixer-uppers often fail inspection without repair negotiations.
Both allow gift funds from family. FHA accepts gifts for the entire down payment, conventional requires some borrower funds at higher ratios.
Sellers favor conventional in competitive situations. FHA's property requirements create more deal-fall-through risk.