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in Point Arena, CA
Point Arena's coastal properties attract first-time buyers and experienced owners alike. Your loan choice affects your down payment, monthly cost, and how competitive your offer looks to sellers.
Conventional loans need stronger credit but cost less long-term. FHA loans open doors with 3.5% down but carry mortgage insurance you can't drop easily.
Conventional loans start at 3% down for first-time buyers and 5% for repeat buyers. You need 620+ credit, though 740+ gets the best rates.
PMI drops off automatically at 78% loan-to-value or by request at 80%. These loans appeal to sellers because they close reliably and appraise at contract price more often than FHA.
FHA loans require just 3.5% down with 580+ credit. You can qualify with 500-579 credit if you put 10% down.
The catch: 1.75% upfront mortgage insurance plus 0.55-0.85% annual premium that lasts the loan's life on most purchases. FHA appraisers flag property issues conventional appraisers might pass, which matters for older coastal homes.
Credit standards separate these programs most. Conventional caps your debt-to-income at 50% with compensating factors. FHA stretches to 56.99% with strong credit or reserves.
Total cost over time tilts conventional. FHA's lifetime mortgage insurance adds $150-300 monthly on a $500K loan. Conventional PMI drops off, saving you thousands once you reach 20% equity.
Pick FHA if your credit sits below 680 or you need maximum buying power with minimal down payment. It works well when you plan to refinance within 3-5 years as your credit improves.
Choose conventional if you have 680+ credit and 5%+ down payment saved. You'll pay less monthly and own a loan type sellers prefer in multiple-offer scenarios common to coastal California.
Yes, refinance to conventional once you hit 20% equity and 620+ credit. This eliminates FHA mortgage insurance and typically lowers your rate.
Both take 30-45 days typically. Conventional edges ahead slightly because appraisers flag fewer property issues that delay closing.
Some do in multiple-offer situations. FHA appraisals scrutinize property condition more, creating closing risk sellers want to avoid.
620 minimum, but you'll pay higher rates. 740+ unlocks the best pricing and makes the monthly payment gap wider versus FHA.
0.55-0.85% annually on most loans. On $500K borrowed, expect $230-355 monthly that never drops off unless you refinance.