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in Monterey Park, CA
Monterey Park buyers face a choice between conventional and FHA financing. Each loan type serves different borrower profiles with distinct trade-offs in down payment, costs, and approval standards.
Most first-time buyers lean toward FHA for the low down payment. Conventional loans reward stronger credit with better rates and lower monthly costs over time.
Conventional loans demand higher credit scores and bigger down payments. The payoff comes through lower rates and no mandatory mortgage insurance once you hit 20% equity.
You need at least 620 credit for approval. Put down less than 20% and you'll pay PMI until your loan balance drops below 80% of the home's value.
These loans cap at $806,500 in Los Angeles County for single-family homes. Above that limit, you're looking at jumbo financing with stricter requirements.
FHA loans accept credit scores as low as 580 with just 3.5% down. You'll pay mortgage insurance for the life of the loan unless you refinance out later.
The upfront insurance premium hits 1.75% of your loan amount, typically rolled into the mortgage. Annual MIP costs 0.55% to 0.85% depending on loan size and down payment.
Los Angeles County FHA limits match conventional at $806,500. These loans allow higher debt ratios than conventional, sometimes up to 50% with strong compensating factors.
Credit standards separate these loans most clearly. FHA accepts 580 scores while conventional wants 620 minimum, with best pricing reserved for 740 and above.
Mortgage insurance works differently on each loan type. Conventional PMI cancels once you reach 20% equity. FHA charges both upfront and annual premiums that stick around for the loan's entire term.
Down payment requirements overlap but serve different buyers. Conventional 3% down programs require strong credit and reserves. FHA's 3.5% option accommodates lower scores and tighter finances.
Choose FHA if your credit sits below 680 or you need maximum flexibility on debt ratios. The trade-off means paying mortgage insurance forever unless you refinance to conventional later.
Go conventional if you have 680+ credit and can handle the slightly tougher approval standards. You'll save thousands over time by eliminating mortgage insurance once you hit 20% equity.
Run the numbers both ways before deciding. A Monterey Park buyer with 640 credit might pay less monthly with FHA initially, but a 720-credit buyer almost always wins with conventional long-term.
Yes, refinancing to conventional eliminates FHA mortgage insurance once you have 20% equity. Most borrowers refinance within 5-7 years to cut monthly costs.
Both take 30-45 days typically. Conventional can move slightly faster with strong credit since underwriting requires less documentation for income verification.
No, FHA typically requires less cash reserves. Conventional often wants 2-6 months reserves depending on down payment and credit profile.
Only if the complex appears on HUD's approved condo list. Conventional financing accepts more condo buildings without FHA approval requirements.
FHA uses the lowest middle credit score among borrowers. Conventional averages scores in some programs, potentially helping couples with score gaps.