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in Tiburon, CA
Tiburon buyers face a distinct financing choice between conventional and FHA loans. Each serves different borrower profiles, and the wrong pick costs you money.
Most Tiburon buyers lean conventional due to higher price points and strong credit. But FHA still makes sense in specific scenarios worth examining.
Conventional loans require no government backing, which gives lenders flexibility on terms. You need 620+ credit and typically 5-20% down, though 3% programs exist for first-timers.
Once you hit 20% equity, PMI drops off completely. That's a permanent monthly savings FHA can't match, making conventional cheaper long-term for most borrowers.
Marin County's high-balance conventional limit lets you finance more expensive properties. Sellers also prefer conventional offers since appraisals are less strict than FHA requirements.
FHA loans accept 580 credit scores with 3.5% down, opening homeownership to buyers rebuilding credit. The government insurance lets lenders take more risk on your behalf.
You pay upfront mortgage insurance plus monthly premiums that last the loan's life. That ongoing cost adds up, especially on Tiburon's higher price points where monthly MIP hits harder.
FHA appraisers flag property issues conventional lenders ignore. Peeling paint, broken railings, roof concerns—all become deal-stoppers requiring repairs before close.
Credit requirements split these loans apart. Conventional wants 620 minimum, while FHA takes 580, making FHA the only game for buyers under 620.
Mortgage insurance works differently. Conventional PMI disappears at 20% equity. FHA's MIP stays forever unless you refinance, costing thousands annually on permanent loans.
Down payment flexibility favors FHA at 3.5% versus conventional's typical 5% minimum. But that 1.5% difference gets erased quickly by FHA's higher monthly insurance costs.
Property standards matter in Tiburon's older housing stock. FHA appraisers require repairs that kill deals. Conventional lenders let cosmetic issues slide, keeping transactions moving.
Choose conventional if your credit clears 680 and you have 5-10% down. You'll pay less monthly and eliminate PMI within years, not decades.
Pick FHA if you're under 620 credit or need maximum purchase power from minimal down payment. Just plan to refinance to conventional once you build equity and improve your score.
For Tiburon specifically, conventional wins most scenarios due to higher price points. FHA's lifetime mortgage insurance penalizes you harder on expensive homes, wiping out the low down payment benefit.
Conventional requires 620 minimum, though 680+ gets you better rates. FHA accepts 580, making it your only option below 620.
Conventional PMI cancels automatically at 78% loan-to-value. FHA's MIP lasts the entire loan unless you refinance to conventional.
Conventional handles higher balances better since FHA's lifetime insurance costs more on expensive homes. Long-term savings favor conventional in Tiburon.
Most sellers favor conventional offers due to fewer property condition requirements. FHA appraisals can derail deals over minor repairs.
FHA requires 3.5% down with 580+ credit. Conventional typically needs 5% down, though 3% programs exist for first-time buyers.
That works if you need the lower credit threshold now. Once you hit 620+ credit and 20% equity, refinancing to conventional eliminates monthly insurance.