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in South Pasadena, CA
South Pasadena's tight housing market means choosing the right loan matters. Most buyers here face a simple choice: conventional or FHA financing.
Each loan type has different down payment rules, credit requirements, and monthly costs. The best fit depends on how much cash you have and what your credit looks like.
Conventional loans require 620+ credit and typically 5-20% down. You avoid mortgage insurance once you hit 20% equity, which saves money over time.
These loans cap at $806,500 in Los Angeles County for 2024. That covers most South Pasadena homes, though some properties exceed conforming limits.
Rates vary by borrower profile and market conditions. Stronger credit and bigger down payments unlock better pricing on conventional financing.
FHA loans accept 580 credit scores and just 3.5% down. You pay upfront mortgage insurance plus monthly premiums that last the loan's life in most cases.
These mortgages cap at $644,000 in Los Angeles County. That's lower than conventional limits but still covers many South Pasadena starter homes.
FHA works well if you have limited savings or rebuilding credit. The tradeoff is higher monthly costs from insurance that doesn't drop off.
Down payment separates these loans most. FHA needs just 3.5% while conventional typically requires 5% minimum (3% for some first-time buyers).
Credit standards diverge sharply. Conventional cuts off at 620, FHA goes down to 580. That 40-point gap opens doors for buyers with past credit issues.
Mortgage insurance works differently. Conventional PMI cancels at 20% equity. FHA insurance stays for the loan term unless you put down 10%+ and wait 11 years.
Loan limits favor conventional. The extra $162,500 in borrowing power matters in South Pasadena where homes push upper price ranges.
Choose FHA if you have under 5% saved or credit between 580-620. You'll pay more monthly but can buy sooner with less cash upfront.
Go conventional if you have 5%+ down and 620+ credit. Lower monthly costs and removable PMI save thousands over the loan term.
For South Pasadena homes above $644,000, conventional is your only conforming option. FHA simply won't cover the purchase price on pricier properties.
Run the numbers both ways. Sometimes a conventional loan with 5% down costs less monthly than FHA, even with PMI, because FHA insurance runs higher.
Yes, through refinancing once you build 20% equity and have 620+ credit. Many borrowers do this to drop FHA mortgage insurance.
Both take similar time, typically 30-45 days. Conventional can edge ahead slightly with simpler appraisal requirements.
Often yes, because FHA appraisals are stricter about repairs. Conventional offers face fewer inspection hurdles that could delay closing.
740+ unlocks top-tier pricing. Each 20-point drop below that typically costs 0.25-0.50% in rate.
For loans over 90% LTV, yes. Put down 10%+ and it drops after 11 years instead.