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in Downey, CA
Downey buyers often wrestle with this exact choice. Both loans work well here, but they suit different financial profiles.
Your credit score and down payment determine which path makes sense. Most borrowers save money with one option over the other.
Conventional loans require 620+ credit and 3% down minimum. You avoid mortgage insurance with 20% down, which saves hundreds monthly.
These loans work best for stable W-2 income and clean credit. PMI drops off automatically at 78% loan-to-value, unlike FHA insurance that sticks around.
FHA loans accept 580 credit scores with 3.5% down. You pay 1.75% upfront insurance plus 0.55%-0.85% annual premiums for the loan's life.
These loans forgive past credit issues more easily. Bankruptcies and foreclosures have shorter waiting periods than conventional standards require.
Credit standards split these loans apart. Conventional caps debt-to-income at 50% for most scenarios, while FHA stretches to 56.9% with strong credit.
Insurance costs tell the real story. FHA charges upfront and monthly premiums that never cancel. Conventional PMI disappears once you hit 78% equity.
Choose FHA if your credit sits below 680 or you have limited down payment savings. The forgiving underwriting offsets higher insurance costs initially.
Pick conventional with 700+ credit and 5% down. You'll pay less monthly and can drop PMI in a few years as Downey home values appreciate.
Conventional wins with 700+ credit. Below 680, FHA often costs less despite mortgage insurance staying on longer.
Yes, refinance once your credit improves and equity reaches 20%. You'll eliminate FHA mortgage insurance permanently.
Both approve condos, but the building needs FHA certification for those loans. Conventional has fewer condo restrictions.
Conventional typically closes in 21-30 days. FHA adds 3-5 days for appraisal requirements and certification checks.
Both allow gifted down payments from family. FHA permits gifts to cover the entire 3.5% minimum down payment.