Loading
in Montebello, CA
Most Montebello buyers face the same fork: conventional loan with better rates or FHA with an easier entry. The right choice depends on your down payment and credit profile, not which loan sounds better.
I've closed both types across Los Angeles County for years. Conventional wins on cost if you qualify. FHA wins when you need flexibility to get approved.
Conventional loans skip government insurance, which means lower monthly costs. You need 620+ credit and typically 5-20% down, though 3% programs exist for first-time buyers.
Once you hit 20% equity, mortgage insurance drops off completely. Rates run lower than FHA, and sellers often prefer conventional offers because appraisals are less strict.
FHA loans work for buyers who can't meet conventional standards yet. You can get approved with 580 credit and just 3.5% down, or 500 credit with 10% down.
The tradeoff is permanent mortgage insurance on most loans plus a 1.75% upfront premium rolled into your balance. Appraisers check safety items like peeling paint and handrails that conventional ignores.
Credit is the biggest split. Conventional needs 620 minimum and prices improve dramatically at 700+. FHA approves 580 scores at standard pricing.
Down payment looks similar at first—both offer 3-3.5% options. But FHA charges 1.75% upfront insurance plus monthly premiums that never drop off. That upfront fee alone adds $3,500 on a $200,000 loan. Conventional mortgage insurance costs less monthly and disappears at 20% equity.
Choose FHA if your credit sits between 580-680 or you need maximum debt ratio flexibility. It's built for buyers who qualify now but wouldn't meet conventional standards.
Choose conventional if you have 680+ credit and can handle 5% down. You'll pay less monthly and build equity faster. Most of my Montebello buyers with two years of stable W-2 income and clean credit go conventional and refinance out of PMI within five years.
Yes, most borrowers refinance to conventional once they hit 20% equity and 680+ credit. You'll drop mortgage insurance completely and likely lower your rate.
Conventional typically closes 2-3 days faster because FHA appraisals often require repairs. Both average 21-25 days with a competent lender.
FHA guidelines allow it, but most lenders set their own 600-620 minimums. I can place 580-599 scores but options narrow significantly.
Yes, it shows in your offer. Some Montebello sellers favor conventional due to easier appraisals, but FHA offers compete fine in normal markets.
Usually yes if your credit exceeds 680. You'll skip the upfront insurance premium and pay lower monthly insurance that eventually drops off.