Loading
in Pico Rivera, CA
Most Pico Rivera buyers wrestle with this choice: conventional or FHA. The right answer depends on your down payment, credit score, and how long you plan to stay.
FHA looks easier to qualify for, but conventional often costs less over time. We'll show you exactly when each makes sense for a Pico Rivera purchase.
Conventional loans require 620+ credit and typically 3-20% down. You'll avoid upfront mortgage insurance and can drop PMI once you hit 20% equity.
These loans work best for borrowers with solid credit who can put down 5% or more. Lenders price them based on your full financial profile, so stronger files get better rates.
If you're buying a second home or investment property in Pico Rivera, conventional is usually your only option. FHA doesn't cover those scenarios.
FHA loans accept 580 credit scores with 3.5% down, or 500-579 scores with 10% down. You'll pay 1.75% upfront insurance plus 0.55-0.85% annual premiums.
The trade-off: easier approval, but you carry mortgage insurance for the loan's life unless you refinance. That monthly cost adds up, especially on Pico Rivera's typical home prices.
FHA shines for buyers with limited savings or credit dings from medical bills or past financial setbacks. Lenders can also count non-traditional income sources more easily.
Credit requirements split these loans hardest. Conventional demands 620 minimum; FHA goes to 580 or even 500. That 120-point gap decides eligibility for many Pico Rivera buyers.
Down payment looks similar at first—both offer 3-3.5% options. But FHA charges 1.75% upfront insurance, so you're really putting down more money at closing.
Mortgage insurance creates the biggest cost difference. Conventional PMI drops off at 20% equity. FHA's MIP never goes away unless you refinance to conventional later.
Debt-to-income limits favor FHA slightly. Most conventional lenders cap at 45-50% DTI, while FHA approves up to 56.9% with compensating factors.
Choose FHA if your credit sits below 640 or you have limited cash for closing. The easier approval outweighs higher long-term costs when you need to get into a home now.
Go conventional if you can scrape together 5-10% down and your credit exceeds 680. You'll pay less monthly and build equity faster without permanent mortgage insurance.
Many Pico Rivera buyers start with FHA, then refinance to conventional after two years of payments and home appreciation. That strategy works if rates don't spike and your credit improves.
Run the numbers both ways before deciding. We see cases where FHA costs $150 less monthly despite the insurance, because the rate came in lower for that borrower's profile.
Yes, through a conventional refinance once you hit 20% equity. Most borrowers do this after 3-5 years to drop FHA's permanent mortgage insurance.
Depends on your credit score. Above 720, conventional typically wins. Below 680, FHA often delivers better rates despite the insurance costs.
Yes, but FHA requires the complex to be FHA-approved. Conventional has fewer condo restrictions, giving you more Pico Rivera properties to choose from.
Between 0.55-0.85% of your loan amount annually. On a $400k loan, that's $183-283 per month for the entire loan term.
Yes. FHA allows 100% gift funds with 3.5% down. Conventional requires you contribute at least 5% from your own funds on most programs.