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in Willits, CA
Most Willits buyers choose between conventional and FHA financing. Both work well for homes in Mendocino County, but they serve different borrower profiles.
Your credit score and down payment determine which option saves you money. One isn't universally better—it depends on your specific financial picture.
Conventional loans require 620+ credit and typically 5-20% down. You'll pay PMI if you put down less than 20%, but you can drop it once you hit 20% equity.
These loans shine for borrowers with decent credit and savings. They offer better rates than FHA if your score is 680 or higher, and the overall costs stay lower over time.
FHA loans accept 580 credit scores and just 3.5% down. You'll pay both upfront and monthly mortgage insurance, and the monthly portion stays for the loan's life in most cases.
This option works when your credit or savings are thin. The insurance costs more than conventional PMI, but FHA gives you access when traditional lending won't.
Credit requirements split these loans apart. Conventional needs 620 minimum and rewards scores above 680 with better pricing. FHA starts at 580 and charges everyone similar rates regardless of score.
Mortgage insurance creates the biggest cost gap. FHA's insurance runs 0.85% annually for 30 years plus 1.75% upfront. Conventional PMI costs 0.3-1.5% annually but cancels at 20% equity, saving thousands long-term.
Go FHA if your credit sits below 640 or you can't save more than 5% down. The insurance costs hurt, but you'll actually get approved and avoid renting longer in Willits.
Choose conventional if you have 680+ credit and 10% or more saved. You'll pay less monthly and save significantly over the loan term. Refinancing from FHA to conventional later makes sense once your equity and credit improve.
Yes, refinancing to conventional once you reach 20% equity eliminates FHA mortgage insurance. This move typically saves $150-300 monthly on a median Willits home.
Both handle single-family homes, condos, and small multifamily properties. FHA has stricter property condition standards, so older Willits homes may need repairs before FHA approval.
For borrowers with 680+ credit, yes. Lower rates and cancellable PMI create substantial savings over 10+ years compared to lifetime FHA insurance.
Put down 20% on conventional if possible to skip PMI entirely. With FHA, 3.5% minimum works since higher down payments don't reduce the insurance cost.
Conventional allows unlimited properties. FHA restricts you to one FHA-financed home at a time, though exceptions exist for relocations and upsizing.