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in Pasadena, CA
Pasadena buyers face a straightforward choice: conventional loans with lower long-term costs or FHA loans with easier qualification. Your credit score and down payment decide which path makes sense.
Both loan types work across Pasadena's diverse housing stock, from South Arroyo bungalows to Bungalow Heaven craftsmen. The difference shows up in your monthly payment and what it takes to get approved.
Conventional loans require 620 minimum credit, but you'll need 680+ to get competitive rates. Put down 20% and you skip mortgage insurance entirely.
These loans cap at conforming limits in Los Angeles County. Lower rates than FHA once you're above 700 credit, and PMI drops off when you hit 78% loan-to-value.
Debt ratios run tighter than FHA—you'll typically need to stay under 43% total DTI. That matters in Pasadena where property taxes run higher than California's average.
FHA accepts 580 credit scores with just 3.5% down. You'll pay mortgage insurance for the loan's life on most deals, but approval odds beat conventional.
Debt ratios stretch to 50% or higher with compensating factors. That flexibility helps Pasadena buyers competing with higher incomes in the LA market.
Upfront MIP of 1.75% rolls into the loan, plus annual premiums that never drop off. The trade-off: you're buying now instead of waiting years to rebuild credit.
The credit gap matters most. FHA approves 580 scores; conventional needs 620 minimum and prefers 680+. That 100-point spread determines which option even exists for you.
Mortgage insurance structures diverge completely. Conventional PMI cancels at 78% LTV—FHA's MIP stays for life on most loans. On a 30-year loan, that's $50,000+ in extra payments.
Down payment minimums look similar at 3%, but FHA's 3.5% floor beats conventional's 3% only if your credit sits below 680. Above that score, conventional wins on rate.
Choose FHA if your credit sits below 680 or you're stretching debt ratios above 45%. The higher insurance cost beats waiting years to qualify conventionally.
Go conventional with 680+ credit and stable income. You'll pay less monthly and save dramatically once PMI drops. If you can swing 20% down, it's not even close.
Run both scenarios with actual quotes. I've seen the rate difference swing $150/month in conventional's favor at 720 credit, even with PMI included.
Yes, refinance once you hit 20% equity and 680+ credit. You'll drop FHA's lifetime mortgage insurance and likely lower your rate.
Both take 30-40 days typically. FHA adds an appraisal inspection for property condition, which can delay deals on older homes.
Conventional signals stronger finances in competitive offers. FHA works fine in normal markets but may lose in multiple-bid situations.
FHA mortgage insurance runs $450-500/month permanently. Conventional PMI costs $300/month but cancels, saving $100,000+ over 30 years.
Only if the complex is FHA-approved. Many Pasadena condos aren't on the list, limiting your options versus conventional.