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in Lomita, CA
Most Lomita buyers face this choice: conventional loan with lower costs or FHA with easier approval. Both get you into a home, but the math changes dramatically based on your credit score and down payment.
The right loan depends on how much cash you have and what your credit looks like. A conventional loan saves you money if you qualify. FHA opens doors when you're stretching to buy.
Conventional loans require minimum 620 credit and up to 20% down for best pricing. Put down less than 20% and you'll pay private mortgage insurance (PMI), but you can cancel it once you hit 20% equity.
These loans work best for borrowers with solid credit and some cash saved. Rates drop significantly at 740+ credit scores. You avoid ongoing mortgage insurance with 20% down, which saves thousands over the loan term.
FHA loans accept 580 credit scores with just 3.5% down. You'll pay 1.75% upfront mortgage insurance plus 0.55%-0.85% annual premium. That annual premium stays for the life of the loan if you put down less than 10%.
The trade-off is clear: easier approval requirements cost you more over time. FHA works when you need lower credit standards or minimal cash to close. Debt-to-income ratios can stretch to 50% with strong compensating factors.
Credit score creates the biggest gap. A 680 score gets you approved for both, but conventional offers better rates and cheaper monthly insurance. With 740+ credit, conventional beats FHA on every cost metric.
Mortgage insurance is where FHA really costs you. The upfront premium adds to your loan balance, and the monthly premium never disappears unless you refinance. Conventional PMI drops off once you reach 20% equity through payments or appreciation.
Choose FHA if your credit sits below 680 or you're putting down less than 10%. The approval flexibility outweighs the higher insurance costs when you need help qualifying. Plan to refinance to conventional once your credit improves and you build equity.
Go conventional if you have 680+ credit and can manage 5-10% down. You'll pay less in insurance and get better rate pricing. The savings compound over 30 years. Run the numbers both ways before deciding.
Yes, you can refinance once you hit 20% equity and your credit improves. Most borrowers do this to drop mortgage insurance and lower their rate.
Both take 25-35 days typically. FHA requires an additional appraisal review but that rarely delays closing with experienced brokers.
With 680+ credit, yes. Conventional PMI costs less monthly and cancels at 20% equity. FHA insurance stays for the loan life with under 10% down.
Run quotes for both. Conventional may price better at 660+ with strong income. Below 640, FHA typically wins despite higher insurance costs.
No. Conventional beats FHA on rate and costs when you avoid mortgage insurance. FHA only makes sense with smaller down payments.