Loading
in Duarte, CA
Most Duarte buyers choose between conventional and FHA financing. The right option depends on your down payment, credit score, and how long you plan to own the property.
Conventional loans reward strong credit with lower costs. FHA loans accept weaker profiles but charge ongoing insurance premiums that never drop off.
Conventional loans aren't backed by government agencies. Lenders set their own credit and income standards, which means stricter qualification but better pricing for qualified borrowers.
You need at least 3% down for a primary residence. Put down 20% and you skip private mortgage insurance entirely, cutting monthly costs significantly.
Credit scores below 680 face steep rate adjustments. Above 740, you get the best pricing conventional lenders offer.
FHA loans carry government insurance that protects lenders against default. This allows them to accept 3.5% down and credit scores as low as 580.
You pay 1.75% upfront insurance plus 0.55% to 0.85% annually. That annual premium never cancels unless you refinance to conventional financing.
FHA works well for buyers who can't hit conventional credit standards. The trade-off is higher lifetime costs even after you build substantial equity.
Down payment minimums look similar, but FHA's 3.5% beats conventional's 3%. Credit requirements diverge sharply—conventional needs 620 minimum while FHA accepts 580.
Mortgage insurance structures differ completely. Conventional PMI cancels at 78% loan-to-value. FHA insurance lasts the full loan term unless you put down 10% or more.
Interest rates vary by borrower profile. Strong credit gets better conventional rates. Weaker credit often prices better with FHA despite the insurance costs.
Choose conventional if your credit exceeds 680 and you have 5% to 20% down. You'll pay less over time and drop insurance faster.
Pick FHA if your credit sits between 580 and 680 or you need the lower 3.5% down payment. Plan to refinance to conventional once your credit improves and you build equity.
Run both scenarios with actual rate quotes. On Duarte properties, the monthly payment difference can justify one option over the other even when you qualify for both.
No. FHA requires exactly 3.5% down with 580+ credit. Scores between 500-579 need 10% down, but most lenders won't approve those files.
Not always. Borrowers with credit below 680 often get better FHA rates despite higher insurance costs. Compare both options with current pricing.
For the entire loan term unless you put 10%+ down. At 10% down, insurance cancels after 11 years of payments.
When you hit 20% equity and your credit exceeds 680. This eliminates mortgage insurance and typically lowers your rate.
Both take similar time. FHA appraisals require property condition standards that can delay closing if repairs are needed.