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in Sausalito, CA
Sausalito buyers face a real choice between conventional and FHA financing. Each loan type has different down payment rules, credit standards, and cost structures that affect your monthly payment.
Most Marin County borrowers start with FHA because of the low down payment. Then they discover conventional loans cost less long-term if they can clear the higher credit bar.
Conventional loans require 620+ credit and work for borrowers with stable income and clean credit. You can put down as little as 3%, but you'll pay PMI until you hit 20% equity.
The upside: PMI drops off automatically at 78% loan-to-value. You also get better rates than FHA if your credit is above 700, and there's no upfront mortgage insurance fee eating into your down payment funds.
FHA loans accept 580 credit scores and let you put down just 3.5%. You'll pay an upfront mortgage insurance premium of 1.75% plus monthly MIP that never drops off on loans over 90% LTV.
FHA works for Sausalito buyers who need flexible credit underwriting or have past credit events. The tradeoff is higher lifetime cost due to permanent mortgage insurance on most loans.
Credit standards separate these loans by 40 points. FHA takes 580, conventional needs 620 minimum. That gap matters for borrowers recovering from credit hits or building credit history.
Insurance costs flip the long-term math. FHA charges 1.75% upfront plus permanent monthly premiums. Conventional charges zero upfront and lets you cancel PMI after you build equity. On a 30-year loan, that difference adds tens of thousands to total cost.
Choose FHA if your credit sits between 580-680 or you need maximum underwriting flexibility. The insurance costs more over time, but you get approved where conventional lenders would decline you.
Go conventional if your credit exceeds 680 and you can document stable income. You'll pay less in insurance costs and get rate discounts that FHA can't match. Run both scenarios with actual numbers before deciding.
Yes. Marin County's FHA loan limit is $1,149,825 for single-family homes, which covers most Sausalito properties outside waterfront premium areas.
FHA requires 3.5% down minimum. Conventional allows 3% down for first-time buyers and 5% for repeat buyers through most lenders.
Not always. FHA rates beat conventional when your credit is below 680. Above 700 credit, conventional typically prices 0.125-0.25% lower.
Only if you put down 10% or more. Otherwise MIP stays for the loan's full term, making refinance to conventional the only exit path.
Timeline is similar. Conventional has fewer FHA-specific requirements like case numbers, but overall approval speed depends on your documentation completeness.