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in Norwalk, CA
Most Norwalk buyers face this choice: conventional loan with lower lifetime costs or FHA loan with easier entry. The right answer depends on your credit score, down payment, and how long you plan to stay.
Both loans work well here, but the math changes dramatically based on your profile. A buyer with 10% down and 680 credit might pay thousands more with FHA over seven years.
Conventional loans require 620+ credit and typically 5-20% down. You pay private mortgage insurance only until you reach 20% equity, then it drops off automatically.
Rates vary by borrower profile and market conditions, but strong credit gets rewarded here. A 740 score pays significantly less than a 660, both in rate and mortgage insurance cost.
FHA loans accept 580 credit scores with 3.5% down. You pay 1.75% upfront mortgage insurance plus 0.55-0.85% annual premium that stays for the loan's life on most purchases.
The lower credit requirement opens doors, but you're locked into that mortgage insurance payment. Even after hitting 20% equity, the insurance stays unless you refinance out.
Credit scores under 640 typically get better deals with FHA despite the permanent insurance. Above 700, conventional almost always wins on total cost.
The upfront FHA insurance adds $5,250 to a $300K loan before you make the first payment. Conventional has no upfront fee, but monthly PMI runs higher if you put down less than 10%.
Choose FHA if your credit sits between 580-680 or you're stretching on debt ratios. The easier approval outweighs the insurance cost for buyers who need the flexibility.
Go conventional if you have 640+ credit and can manage 5% down. You'll pay less monthly once PMI drops, and you avoid that 1.75% upfront hit. Plan to refinance FHA to conventional once your credit improves past 680.
No. FHA insurance stays for the loan's life if you put down less than 10%. Refinancing to conventional is the only way to drop it after building equity.
Usually FHA by a small margin initially, but conventional becomes cheaper after PMI cancels. Total cost over seven years typically favors conventional even at this credit level.
Yes, with 620+ credit and solid income documentation. You'll pay PMI until reaching 20% equity, but it drops automatically unlike FHA.
No. Both have the same LA County loan limit of $766,550 for single-family homes. Above that, you need a jumbo loan regardless of program.
Speed is similar, both around 30 days. FHA appraisals can take slightly longer due to stricter property condition requirements that may trigger repairs.