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in South El Monte, CA
Most South El Monte buyers face this choice: conventional loan with lower total cost, or FHA loan with easier approval. The right answer depends on your down payment and credit score.
Conventional loans reward strong borrowers with cheaper monthly payments. FHA loans open doors for buyers who can't hit 620 credit or 5% down. Your choice shapes what you pay over the life of the loan.
Conventional loans need 620 minimum credit and 3% down. Put down 20% and you skip private mortgage insurance entirely. That saves $150-300 monthly on a typical South El Monte purchase.
Most conventional borrowers pay lower rates than FHA once their credit hits 680. PMI drops off automatically at 78% loan-to-value. No upfront funding fee like FHA charges.
FHA loans accept 580 credit with 3.5% down. Go below 580 and you need 10% down. Debt ratios stretch higher than conventional—useful when income is tight but steady.
Every FHA loan carries lifetime mortgage insurance if you put down less than 10%. You also pay 1.75% upfront funding fee, usually rolled into the loan. These costs add up but the lower barriers get you approved.
Credit makes the biggest split. Conventional rejects most borrowers under 640. FHA approves 580-620 scores routinely. That 60-point gap is the difference between renting another year or buying now.
PMI structure separates them long-term. Conventional PMI drops off. FHA mortgage insurance stays for the loan life unless you refinance. On a 30-year loan, that's $50,000+ in extra payments.
Choose conventional if you have 640+ credit and 5% down. The savings from lower rates and cancellable PMI outweigh any short-term benefits of FHA. You'll pay less monthly and build equity faster.
Go FHA if your credit sits between 580-640 or you can only manage 3.5% down. Accept the higher lifetime cost as the price of entry. Plan to refinance to conventional once you hit 20% equity and 680 credit.
Yes, refinance once you reach 20% equity and 640+ credit. This eliminates lifetime mortgage insurance and usually lowers your rate.
Both take 30-45 days typically. FHA appraisals can delay closing if the property needs repairs conventional lenders would ignore.
FHA charges 1.75% upfront funding fee. Conventional has no upfront cost but may require larger down payment depending on your credit.
Yes, it shows in your offer. Some sellers prefer conventional because FHA appraisals scrutinize property condition more closely.
740+ unlocks top-tier pricing. Every 20 points below that costs about 0.25% in rate until you hit the 620 floor.