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in Malibu, CA
Malibu's premium real estate creates a clear divide between these two loan types. Most properties here exceed FHA's Los Angeles County loan limit of $1,149,825, which pushes many buyers toward conventional financing.
That said, FHA can work for condos and smaller beach properties under the limit. The question isn't which loan is better — it's which one actually works for what you're buying.
Conventional loans require 620+ credit and typically 5-20% down. You'll pay less in mortgage insurance if you put down 10% or more, and MI drops off entirely at 78% loan-to-value.
For Malibu's price range, conventional offers the flexibility you need. You can borrow well above conforming limits through jumbo products, and the underwriting makes sense for properties with ocean views or unique features.
FHA accepts 580 credit with 3.5% down and allows higher debt ratios than conventional. You'll pay 1.75% upfront MI plus 0.55-0.85% annual MI that stays for the life of the loan on most purchases.
The problem in Malibu is the limit. At $1,149,825, you're looking at condos or small properties in less prime areas. FHA also has strict appraisal standards that can flag issues on older beach homes.
Credit and down payment are where FHA shines — 580 score and 3.5% down beats conventional's 620 minimum and typical 5-10% requirement. But FHA's permanent mortgage insurance costs more long-term than conventional MI that cancels.
The real separator here is loan limits. Conventional conforming goes to $1,149,825, then you shift to jumbo with different pricing. FHA stops at $1,149,825 period, which cuts you off from most Malibu inventory.
If you're buying above $1.15M, conventional is your only choice. Below that threshold, run the numbers on MI costs — FHA's lower down payment often gets erased by higher monthly insurance premiums over five years.
Most Malibu buyers end up conventional because of the property mix here. FHA works if you're targeting a condo under the limit and need the lower credit flexibility, but check the HOA — not all are FHA-approved.
Only if the purchase price stays under $1,149,825. Most single-family beach properties exceed that limit, putting them in conventional or jumbo territory.
Not always. You can go as low as 5% on conventional, though jumbo loans above the conforming limit typically want 10-20% minimum.
Depends on your down payment. FHA's lower down payment often leads to higher MI costs that exceed conventional's MI, even with less money upfront.
Yes. FHA has strict property standards that can require repairs before closing, which matters on vintage coastal properties with weathering or foundation settling.
Absolutely. Many buyers start FHA for the lower down payment, then refinance to conventional once they hit 20% equity to drop MI completely.