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in Larkspur, CA
Larkspur's housing market sits in one of California's priciest counties. Your loan choice directly impacts how much house you can afford and what you'll pay over time.
Conventional and FHA loans serve different borrower profiles. One rewards strong credit with lower costs. The other opens doors for buyers with smaller down payments.
Conventional loans aren't backed by the government. Lenders set their own guidelines within Fannie Mae and Freddie Mac standards. You typically need 620+ credit and 3-5% down minimum.
Put down 20% and you skip mortgage insurance entirely. Lower than 20% means paying PMI until you hit that equity mark. Rates vary by borrower profile and market conditions but reward strong credit heavily.
FHA loans come insured by the Federal Housing Administration. They accept 580 credit scores with 3.5% down. Scores between 500-579 need 10% down.
You'll pay two types of mortgage insurance: an upfront premium of 1.75% and annual premiums for the loan's life on most purchases. This insurance never drops off unless you refinance to conventional.
Credit requirements split these loans apart. Conventional lenders want 620 minimum and price loans based on your score. FHA accepts 580 and doesn't adjust rates much for credit variations.
Mortgage insurance works differently on each. Conventional PMI drops at 20% equity. FHA insurance stays put for 30 years unless you refinance. Down payment minimums look similar but the long-term cost structure differs dramatically.
Debt-to-income limits favor FHA for buyers with existing obligations. Conventional lenders cap around 45-50% DTI. FHA stretches to 57% with compensating factors like higher credit scores or cash reserves.
Choose conventional if your credit exceeds 680 and you'll hit 20% down within five years. The PMI savings and better rates compound significantly in Marin County's price range.
FHA makes sense for credit scores under 660 or when saving more down payment delays buying too long. The upfront insurance gets rolled into your loan. Monthly costs run higher but you access homeownership sooner.
Run numbers both ways before deciding. A $900,000 Larkspur purchase with 5% down shows different break-even points depending on your credit score and how fast you'll build equity.
Yes, through a refinance once you hit 20% equity and your credit qualifies. This removes the permanent FHA mortgage insurance.
Speed depends on your broker and documentation readiness, not loan type. Both close in 21-30 days with complete files.
FHA caps at $1,149,825 for Marin County in 2024. Conventional goes higher through conforming jumbo programs.
Most will, but FHA appraisals scrutinize property condition more strictly. Conventional offers may edge ahead in multiple-bid situations.
Both allow gift funds from family. FHA permits 100% gifted down payment while conventional requires some borrower funds at lower down payments.