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in Compton, CA
Compton buyers often choose between conventional and FHA loans based on down payment capacity and credit profile. Both programs work well here, but they serve different financial situations.
FHA loans dominate Compton purchases because of the 3.5% down payment minimum. Conventional loans cost less monthly if you bring 20% down and have 680+ credit.
Conventional loans require 620 minimum credit and 3% down for first-time buyers. You pay private mortgage insurance under 20% down, but can cancel it once you hit 78% loan-to-value.
Rates run 0.25-0.50% lower than FHA if your credit tops 700. Higher loan limits mean you can borrow more without hitting conforming caps that trigger jumbo pricing.
FHA loans accept 580 credit with 3.5% down or 500-579 credit with 10% down. Mortgage insurance stays for the life of the loan on most purchases, costing 0.55% annually.
Sellers can contribute up to 6% toward closing costs versus 3% on conventional. This flexibility helps Compton buyers who need down payment assistance or have thinner savings.
Credit standards split these programs sharply. FHA approves 580 scores while conventional wants 620 minimum and charges higher rates until you hit 680-700.
Mortgage insurance costs differ dramatically over time. FHA charges 1.75% upfront plus 0.55% yearly for life. Conventional PMI ranges 0.3-1.5% based on credit but drops off at 78% LTV.
Down payment flexibility favors FHA for buyers with limited savings. Conventional demands higher minimums for investment properties and second homes.
Choose FHA if your credit sits between 580-680 or you have under 10% to put down. The upfront and lifetime mortgage insurance cost less than conventional PMI at lower credit tiers.
Go conventional with 700+ credit and 10%+ down payment. You'll pay lower rates and shed mortgage insurance within a few years as your home appreciates and principal pays down.
Compton buyers using down payment assistance often pick FHA because county programs stack easily with the low 3.5% minimum. Conventional works better if you're refinancing out of FHA later to drop insurance.
Yes. Refinance to conventional once you hit 20% equity and 620+ credit. This removes FHA's lifetime mortgage insurance and typically lowers your rate.
Conventional costs less if you have 700+ credit and 10%+ down. FHA costs less monthly with under 680 credit despite higher insurance.
Yes, but the condo complex must be FHA-approved for FHA loans. Conventional approves more buildings without that restriction.
740+ credit unlocks the best pricing tiers. Each 20-point drop below that adds rate cost until you hit the 620 floor.
Yes. FHA allows 100% gift funds for down payment. Conventional requires 5% from your own funds if putting down less than 20%.