Loading
in Long Beach, CA
Long Beach buyers face a choice between conventional loans and FHA financing. The right pick depends on your down payment, credit score, and how long you plan to own the property.
Most borrowers assume FHA is always cheaper because of the low down payment. That math changes fast once you factor in mortgage insurance costs over time.
Conventional loans require higher credit scores—typically 620 minimum, 740+ for best rates. You'll need at least 3% down, but 20% eliminates private mortgage insurance entirely.
PMI on conventional loans drops off automatically once you hit 78% loan-to-value. That's real money back in your pocket every month after a few years of payments.
These loans cap at $806,500 in Los Angeles County for 2024. Anything above that pushes you into jumbo territory with stricter underwriting.
FHA loans accept credit scores as low as 580 with 3.5% down. You'll pay both upfront mortgage insurance (1.75% of loan amount) and annual MIP that never drops off.
That ongoing MIP costs 0.55% to 0.85% annually for the life of the loan. On a $500,000 purchase, you're looking at $230-$350 monthly that never goes away.
FHA caps at $644,000 in Long Beach. The upfront insurance gets rolled into your loan, so you're paying interest on insurance for 30 years.
Credit matters more for conventional. A 620 borrower pays significantly higher rates than someone at 740. FHA pricing is flatter across credit tiers.
Mortgage insurance is where these loans diverge completely. FHA charges you forever. Conventional lets you drop it once you build equity.
Down payment flexibility favors FHA if you have limited cash but decent income. Conventional rewards bigger down payments with better pricing and no PMI at 20%.
Choose FHA if your credit sits below 640 or you need the lower down payment to close. Just know you're paying for that flexibility through permanent mortgage insurance.
Go conventional if you can clear 3-5% down and have 680+ credit. You'll pay less over time and the PMI disappears eventually.
Run the numbers both ways. I see borrowers pick FHA for the low entry cost, then refinance to conventional within three years once their credit improves and equity builds.
Not without refinancing into a conventional loan. FHA loans originated after 2013 carry mortgage insurance for the full loan term regardless of equity.
Minimum 620, but expect significantly better rates at 740+. Rates vary by borrower profile and market conditions.
Almost never for long-term ownership. The permanent mortgage insurance erases any rate advantage within a few years of payments.
FHA requires 3.5% minimum with 580+ credit, 10% with 500-579 credit. Conventional allows 3% down on specific first-time buyer programs.
FHA is stricter on property condition. Conventional lenders care less about cosmetic issues as long as the home is structurally sound.