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in San Rafael, CA
San Rafael buyers face a choice between conventional and FHA financing. Each loan works for different situations, budgets, and credit profiles.
Conventional loans reward strong credit with lower costs. FHA loans open doors for buyers with smaller down payments or credit challenges.
Your choice affects your monthly payment, upfront costs, and long-term equity. Most San Rafael buyers benefit from one clear winner once they see the numbers.
Conventional loans require 3% to 20% down depending on whether you waive mortgage insurance. You need 620 minimum credit, but 740+ unlocks the best rates.
Put down 20% and you skip mortgage insurance entirely. Below that, you pay PMI monthly until you hit 20% equity—then it drops off automatically.
Debt-to-income caps at 50% with strong credit and reserves. Conventional loans dominate Marin County because most buyers here qualify for better terms than FHA offers.
These loans work for primary homes, second homes, and investment properties. Rate pricing adjusts based on property type and down payment size.
FHA loans require 3.5% down with 580 credit or 10% down with 500-579 credit. You pay an upfront funding fee of 1.75% plus annual mortgage insurance for the loan's life.
Monthly mortgage insurance never drops off unless you refinance out of FHA. This is the big cost trap most buyers miss when they choose FHA.
Debt-to-income stretches to 57% with automated approval, sometimes higher with manual underwriting. FHA forgives credit issues like past foreclosures faster than conventional.
Sellers can contribute up to 6% toward your closing costs versus 3% on conventional. That flexibility helps buyers who lack cash reserves despite stable income.
Mortgage insurance is the main divider. Conventional PMI cancels at 20% equity—FHA mortgage insurance never ends unless you refinance.
Credit standards split the two programs. Conventional rewards 740+ scores with rate discounts. FHA accepts 580 and treats most scores the same.
Down payment flexibility favors FHA at first glance. But FHA's lifetime mortgage insurance often costs more than a conventional loan with 5% down.
Property standards differ slightly. FHA appraisals flag safety issues conventional appraisers might pass. This matters more with older San Rafael homes.
Choose conventional if your credit exceeds 680 and you can put down 5% or more. You'll pay less monthly and drop mortgage insurance eventually.
FHA makes sense if your credit sits between 580-660 or you need maximum debt ratio flexibility. Just plan to refinance to conventional once your credit improves.
Most San Rafael buyers with 700+ credit regret choosing FHA once they calculate lifetime mortgage insurance costs. Run both scenarios before deciding.
First-time buyers often default to FHA assuming it's their only option. That's rarely true—most qualify for conventional with better long-term costs.
Yes, through a conventional refinance once you hit 20% equity and your credit improves. Most borrowers do this within 3-5 years to drop FHA mortgage insurance.
Both take 21-30 days typically. Conventional has slightly fewer appraisal hurdles with older properties, which can shave a few days off timelines.
Yes, but the condo complex must be FHA-approved for FHA loans. Conventional has more flexible condo approval standards in Marin County.
740 or higher unlocks top-tier pricing. The jump from 720 to 740 typically saves 0.25% on your rate—meaningful over 30 years.
No, both require the same income and asset documentation. FHA just applies more flexible underwriting standards to that same paperwork.
Both programs allow gift funds from family. FHA permits 100% gift funds while conventional typically requires 5% borrower contribution on 3% down loans.