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in Hawaiian Gardens, CA
Hawaiian Gardens buyers often debate between conventional and FHA financing. The right choice depends on your down payment, credit score, and how long you plan to own the property.
Both loans work for purchases and refinances in Los Angeles County. FHA typically costs less upfront but more over time, while conventional requires stronger credit but lower monthly payments.
Conventional loans require 620-640 credit and at least 3% down for purchases. You pay private mortgage insurance (PMI) only until you reach 20% equity, then it drops off automatically.
These loans shine for buyers with solid credit and stable income. Rates beat FHA by 0.125-0.375% in most cases, and the monthly MI costs less once you're past 5% down.
Conventional works better for higher-priced homes in Hawaiian Gardens. Loan limits go up to $1,149,825 for conforming loans in Los Angeles County, giving you more buying power than FHA caps.
FHA loans accept 580 credit scores with 3.5% down, or 500 credit with 10% down. You pay 1.75% upfront mortgage insurance plus 0.55-0.85% annual MI that stays for the loan's life in most cases.
The program helps first-time buyers and borrowers rebuilding credit. Sellers can contribute up to 6% toward closing costs, compared to 3-9% on conventional depending on down payment.
FHA caps at $644,000 in Los Angeles County for 2024. That upfront MI gets rolled into your loan amount, so you're financing it over 30 years at your mortgage rate.
Credit requirements separate these programs by 40-60 points. FHA approves 580 scores while conventional needs 620-640, and that gap widens the price you pay in interest and fees.
Mortgage insurance works opposite ways. Conventional MI drops off at 20% equity, saving you $100-300 monthly. FHA MI never cancels unless you refinance, adding $250-500 to every payment for 30 years.
Down payment flexibility favors FHA at first glance, but conventional at 5% down often costs less monthly than FHA at 3.5% once you factor in the lifetime MI expense.
Choose FHA if your credit sits between 580-660 or you need maximum seller concessions. The higher lifetime cost makes sense when it's your only approval path or you'll refinance within 3-5 years anyway.
Go conventional if you have 640+ credit and can manage 5% down. You'll pay less monthly, lock better rates, and drop MI after a few years of appreciation in Los Angeles County.
Run both scenarios with exact numbers before deciding. A 620 credit score might qualify for both, but conventional saves $8,000-15,000 over seven years despite the steeper down payment.
Yes, through a refinance once you hit 20% equity and 620+ credit. This eliminates FHA mortgage insurance and usually lowers your rate and payment.
Both take 21-30 days typically. FHA requires an FHA appraisal with stricter property standards, which can delay closing if repairs are needed.
For most buyers, yes. FHA's lifetime MI adds $50,000-90,000 over 30 years compared to removable PMI on conventional loans.
740+ unlocks top-tier pricing. Every 20-point drop below that costs about 0.25% in rate or extra fees.
No, FHA requires owner occupancy. Conventional allows second homes and investment properties with higher down payments and rates.