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in Lakewood, CA
Most Lakewood buyers ask whether they should go conventional or FHA. The answer depends on your down payment, credit score, and how long you plan to own the property.
FHA loans make homeownership accessible with just 3.5% down. Conventional loans reward strong credit with lower costs over time.
Conventional loans require no mortgage insurance once you hit 20% equity. This makes them cheaper long-term for borrowers who can put more down or plan to stay in the home.
You'll need at least 620 credit to qualify, though 740+ gets you the best rates. Debt-to-income ratios cap at 50% with strong compensating factors.
FHA loans let you buy with 580 credit and just 3.5% down. Monthly mortgage insurance runs about 0.55% annually, and you pay 1.75% upfront at closing.
The catch: mortgage insurance stays for the life of the loan unless you refinance. That monthly cost adds up if you keep the loan past five years.
Credit score creates the biggest cost gap. With 680 credit and 5% down, conventional typically beats FHA after year three because you can cancel PMI later.
FHA wins for scores below 640 or down payments under 5%. Conventional wins with 20% down or strong credit that keeps monthly insurance cheap until it drops.
Choose FHA if your credit sits below 660 or you need to preserve cash for reserves. The lower barriers get you in the door even with past credit bumps.
Choose conventional if you have 680+ credit or can put 10%+ down. You'll pay less monthly and build equity faster without permanent mortgage insurance dragging on your payment.
Yes, you can refinance to conventional once you hit 20% equity. This eliminates FHA mortgage insurance and typically lowers your monthly payment.
Both take 25-35 days on average. FHA appraisals are stricter and may require repairs, which can add a week if issues come up.
Most sellers accept both, but conventional offers look stronger. FHA appraisals sometimes flag repairs that conventional appraisers let slide.
Around 680-700 is the break-even point. Above that, conventional rates improve faster than FHA as your score climbs.
Yes, FHA works for repeat buyers. You just need to occupy the property as your primary residence.