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in Hawthorne, CA
Hawthorne buyers usually face a choice between conventional and FHA financing. Each loan type has different requirements for credit, down payment, and ongoing costs.
Most first-time buyers lean toward FHA for the 3.5% down payment. Buyers with stronger credit often save money long-term with conventional loans despite higher upfront costs.
Conventional loans require 620+ credit and typically 5% down for single-family homes. You can put down just 3% on your first home, but expect higher rates and PMI until you hit 20% equity.
PMI drops off automatically at 78% loan-to-value. This makes conventional loans cheaper over time compared to FHA's lifetime mortgage insurance on loans above 90% LTV.
Lenders price conventional loans based on your credit score and down payment. A 740 score with 10% down gets significantly better rates than 680 with 5% down.
FHA loans accept 580 credit scores with 3.5% down. You can qualify with a 500 score if you put down 10%, though most lenders set their own minimums higher.
FHA charges 1.75% upfront mortgage insurance plus annual premiums. On a $600,000 Hawthorne home, that's $10,500 rolled into your loan before you make the first payment.
Annual mortgage insurance runs 0.55% to 0.85% depending on your down payment and loan amount. This premium stays for the life of the loan on purchases with less than 10% down.
Credit score creates the biggest approval split. FHA approves borrowers at 580 that conventional lenders reject outright. But that flexibility costs you hundreds monthly in mortgage insurance.
Down payment looks similar at first—3% conventional versus 3.5% FHA. The real difference shows up in monthly costs where FHA's insurance premiums run $200-400 higher on typical Hawthorne properties.
Debt ratios favor FHA for buyers with car payments or student loans. Conventional lenders cap most borrowers at 45% debt-to-income while FHA approves up to 50% with compensating factors.
Choose FHA if your credit sits between 580-660 or you're stretching to cover closing costs. The lower score requirement and 3.5% down payment get you approved when conventional lenders say no.
Go conventional if you have 680+ credit and can handle 5% down. You'll pay less in mortgage insurance and save thousands over the loan term. Run the numbers on both—the monthly payment difference adds up fast.
Plan to refinance out of FHA within 2-3 years if your credit improves. Many Hawthorne buyers use FHA as a stepping stone, then switch to conventional to drop that lifetime mortgage insurance.
Yes, conventional loans allow 3-5% down. You'll pay PMI until you reach 20% equity, but it costs less than FHA insurance and cancels automatically.
FHA requires 580 minimum for 3.5% down. Conventional lenders want 620 minimum, though you'll get better rates at 680 or above.
You'd pay $10,500 upfront (1.75%) plus $275-425 monthly. That annual premium stays for the life of your loan with less than 10% down.
Conventional typically has lower closing costs since there's no upfront mortgage insurance premium. FHA adds 1.75% to your loan amount before you start.
Yes, refinancing to conventional makes sense once you hit 20% equity and your credit improves. You'll drop the lifetime mortgage insurance and likely lower your rate.