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in Norwalk, CA
Norwalk buyers often choose between conventional and VA loans, two fundamentally different financing paths. Each serves distinct borrower profiles with unique advantages.
Conventional loans require down payments but offer flexibility for any buyer. VA loans eliminate down payments but restrict eligibility to military-connected borrowers.
Understanding these core differences shapes your budget, timeline, and purchasing power in Los Angeles County's competitive market.
Conventional loans follow Fannie Mae and Freddie Mac guidelines without government backing. You'll need at least 3% down, though 20% eliminates private mortgage insurance.
Credit requirements typically start at 620, with better rates at 740+. Debt-to-income ratios max out around 50% for most borrowers.
These loans work for primary homes, second homes, and investment properties. You can finance up to $806,500 in most of Los Angeles County before hitting conforming limits.
PMI costs 0.3% to 1.5% annually when you put down less than 20%. You can remove it once you reach 20% equity through payments or appreciation.
VA loans guarantee mortgages for veterans, active military, and qualifying spouses through the Department of Veterans Affairs. Zero down payment eliminates the biggest barrier to homeownership.
Credit standards are more forgiving than conventional loans, though most lenders still want 620 minimum. The VA doesn't set a maximum DTI, giving lenders flexibility for strong applications.
You'll pay a funding fee of 2.15% to 3.3% depending on down payment and usage. This fee finances the program but adds to your loan balance or closing costs.
VA loans prohibit prepayment penalties and limit closing costs sellers can charge you. Primary residences only—no investment properties or second homes qualify.
Down payment creates the starkest divide. Conventional requires 3% minimum while VA allows zero, giving veterans immediate access to Norwalk homes without years of savings.
Monthly costs differ beyond the mortgage. Conventional borrowers pay PMI below 20% down—typically $100 to $300 monthly on a $500,000 loan. VA borrowers pay no monthly insurance but finance a larger upfront funding fee.
Property requirements vary significantly. VA appraisers check for safety issues like peeling paint or faulty handrails that conventional appraisers ignore. This protects veterans but can complicate purchases of fixer-uppers.
Sellers sometimes hesitate on VA offers despite their strength. Misunderstandings about VA appraisals and closing cost restrictions create unfounded resistance, though experienced agents know VA buyers close reliably.
Choose VA if you have eligibility and plan to occupy the property. The zero-down benefit outweighs the funding fee for most veterans, especially first-time users paying 2.15% versus 3% down conventional.
Conventional makes sense when you lack VA eligibility, need an investment property, or want a second home. It's also better for repeat VA users who've exhausted their entitlement in expensive Los Angeles County markets.
Credit score shifts the calculation. Strong credit (740+) gets aggressive conventional rates while VA rates stay consistent regardless of score. Borrowers with 680 credit often save more with VA despite the funding fee.
Consider your timeline and property condition. VA loans take longer due to stricter appraisals, and sellers prefer conventional offers when choosing between similar bids. If you're competing on a turnkey Norwalk home, conventional might win the deal even if VA saves money long-term.
Yes, if you've sold your previous VA-financed home or have remaining entitlement. Full entitlement restoration requires paying off and selling the prior property.
Usually not. A 2.15% funding fee on $500,000 costs $10,750 once. PMI at 0.5% costs $2,500 yearly until you hit 20% equity, typically exceeding funding fee costs.
Not automatically, but some prefer conventional financing. Working with an agent experienced in VA transactions helps position your offer competitively despite misconceptions.
No. You choose one loan type per property. However, you can use VA for your primary and conventional for an investment property simultaneously.
Conventional typically closes 3-5 days faster. VA appraisals require additional property inspections that extend timelines, though experienced lenders minimize delays.