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in Lawndale, CA
Lawndale buyers choosing between conventional and FHA loans face a real tradeoff. Conventional requires more down payment but avoids mortgage insurance. FHA opens the door with just 3.5% down but carries insurance costs for the life of the loan.
Both programs work in Los Angeles County, where the median household income is $87,760. Your choice depends on how much cash you have at closing and what monthly payment you can sustain.
Conventional at 6.25% works best when you have real savings. At 80% LTV, PMI drops off entirely—no insurance cost hanging over your loan.
Underwriting wants documented income and two years of work history. You'll need reserves beyond the down payment, but the payoff is a clean mortgage with no insurance premium.
FHA at 5.875% opens doors for buyers with limited savings. The 3.5% minimum down keeps cash in your pocket at closing.
Mortgage insurance runs for the life of the loan above 90% LTV. That insurance cost adds to your monthly payment, but the lower rate and minimal down payment appeal to first-time buyers.
The down-payment gap is the first real difference. Conventional demands 20% down to avoid PMI; FHA lets you start with 3.5%. That gap means tens of thousands of dollars at closing.
FHA's rate advantage (5.875% vs 6.25%) partly offsets the insurance cost. But conventional buyers who hit 80% LTV skip mortgage insurance entirely—a permanent savings that compounds over 30 years.
Conventional underwriting is stricter on income and reserves. FHA accepts lower credit scores and thinner documentation, making it the faster path for self-employed or non-traditional earners.
Choose conventional if you have solid savings and stable W-2 income. A household earning $87,760 or more with 20% down avoids PMI entirely and builds equity faster.
Pick FHA if you're putting down less than 15% or have non-traditional income. The lower rate and minimal down payment make sense when you'd otherwise stretch to qualify or drain your emergency fund.
On a $750,000 loan, conventional at 6.25% runs $4,618 monthly P&I. FHA at 5.875% is $4,437 monthly P&I. FHA saves $181 per month, but add mortgage insurance to the FHA payment.
Yes. At 80% LTV (20% down), conventional loans carry zero PMI. Below 80% LTV, PMI applies until you hit 78% LTV or request cancellation at 80%.
Only if you put 10% or more down. Above 90% LTV, MIP runs for the life of the loan. Below 10% down, you're locked into MIP for 30 years.
FHA typically moves faster for self-employed applicants. Conventional wants two years of tax returns and stricter income averaging. FHA accepts bank statements and profit-and-loss statements more readily.
Yes. Conventional loans work at 5% or 10% down, but PMI applies until you hit 80% LTV. The insurance cost makes the monthly payment higher than FHA at the same loan amount.