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in Corte Madera, CA
Most Corte Madera buyers ask which loan costs less long-term. The answer depends on your down payment size and credit profile.
FHA loans get you in with 3.5% down but carry mortgage insurance for life. Conventional loans require stronger credit but drop PMI once you hit 20% equity.
Marin County prices make the choice more critical than in cheaper markets. A half-point rate difference means thousands annually on local home values.
Conventional loans work best for borrowers with 620+ credit and at least 3% down. You'll pay lower rates than FHA if your score exceeds 680.
PMI drops off automatically at 78% loan-to-value, or you can request removal at 80%. This saves $200-400 monthly on typical Corte Madera purchases.
Loan limits go up to $1,149,825 in Marin County for 2024. Anything above that requires a jumbo loan, which conventional lenders handle easily.
Underwriting is stricter than FHA. Lenders scrutinize debt-to-income ratios and require full documentation of income and assets.
FHA allows 580 credit scores with 3.5% down, or 500 scores with 10% down. Most Corte Madera buyers use the 3.5% option.
You'll pay 1.75% upfront mortgage insurance plus 0.55%-0.85% annually. That annual premium never drops off unless you refinance to conventional.
Loan limits cap at $1,149,825 in Marin, matching conventional. Sellers sometimes resist FHA offers due to stricter property condition requirements.
Debt-to-income ratios stretch to 50% with strong compensating factors. This helps buyers with student loans or car payments qualify.
The mortgage insurance gap is enormous. FHA charges 0.55%-0.85% annually forever. Conventional PMI costs similar amounts but cancels at 20% equity.
On a $900,000 Corte Madera home, that's $4,950-7,650 yearly with FHA versus zero once you reach 20% equity with conventional. Over 10 years, FHA insurance costs $49,500-76,500 more.
Interest rates favor conventional for borrowers above 680 credit. Expect 0.25%-0.50% lower rates, which compounds the savings beyond just insurance costs.
FHA appraisals flag peeling paint, handrail issues, and foundation cracks conventional appraisers ignore. This kills some deals in older Marin neighborhoods.
Choose FHA if your credit sits between 580-679 or you can only manage 3.5% down. The higher costs are the price of accessibility.
Go conventional with 680+ credit and 5%+ down payment. You'll save enough on rates and insurance to justify scraping together the extra cash.
Planning to sell or refinance within 5 years? FHA's cost disadvantage matters less. Staying 10+ years? Conventional saves six figures in insurance alone.
Some Corte Madera sellers won't accept FHA offers on older homes. If you're targeting vintage properties near downtown, conventional gives you more negotiating power.
Yes, through a refinance once you reach 20% equity. You'll need qualifying credit and income at that time to make the switch worthwhile.
Many do, especially on older homes. FHA appraisals can demand repairs sellers don't want to make, so conventional offers close more reliably.
740+ credit unlocks top-tier pricing. Every 20-point drop below that adds 0.25%-0.50% to your rate depending on down payment size.
Only if you put 10%+ down, then it cancels after 11 years. With 3.5%-9.9% down, it stays for the loan's entire life.
Both hit the $1,149,825 limit. Conventional handles the amount better due to lower insurance costs on high loan balances in expensive markets.