Loading
in Atwater, CA
Atwater buyers face a choice between Conventional and FHA loans. Both work for single-family homes and condos in Merced County, but the right pick depends on your down payment and credit score.
Conventional loans reward strong credit with lower costs. FHA loans open doors for buyers with smaller down payments or past credit issues.
Conventional loans require 3% down for first-time buyers, 5% for repeat buyers. Most lenders want 620 credit minimum, but you'll get better rates at 740+.
PMI drops off automatically at 78% loan-to-value. You can also request removal at 80% LTV once you build equity through payments or appreciation.
Loan limits in Merced County hit $806,500 for 2025. Above that, you need a jumbo loan with stricter requirements.
FHA loans accept 3.5% down with 580 credit. You can qualify with 500 credit if you put 10% down, though most lenders set their own 580 floor.
Mortgage insurance has two parts: 1.75% upfront premium rolled into your loan, plus annual premiums from 0.55% to 1.05% based on down payment size. Most borrowers pay MIP for the loan's life unless they put 10%+ down.
FHA loan limits cap at $498,257 in Merced County for single-family homes. That covers most Atwater properties but restricts higher-priced neighborhoods.
Credit matters more on Conventional loans. A 680 score might get you 6.5% Conventional but only 6.8% FHA due to risk-based pricing. Rates vary by borrower profile and market conditions.
FHA charges mortgage insurance regardless of down payment size. Conventional PMI only applies below 20% down and costs less for borrowers with strong credit.
Property standards differ too. FHA appraisals flag peeling paint, broken appliances, and safety issues that Conventional appraisers might ignore. Sellers in Atwater sometimes reject FHA offers knowing repairs will come up.
Pick FHA if you have under 620 credit or can't clear 5% down. The upfront and monthly insurance costs hurt, but you get approved when Conventional lenders say no.
Choose Conventional if you have 680+ credit and 5-10% saved. Your monthly payment will be lower, and PMI disappears once you hit 78% LTV through payments or appreciation.
Run the numbers on both. A buyer with 5% down and 720 credit often pays $150-200 less monthly on Conventional despite the same rate quote due to cheaper mortgage insurance.
Yes, through refinancing. You'll need 20% equity to drop mortgage insurance and credit above 620 for standard Conventional terms.
Both take 30-45 days typically. FHA appraisals sometimes delay closing if the appraiser flags property repairs that need completion.
Many do. FHA appraisals require repairs that Conventional loans don't, making deals harder to close on older homes.
Most lenders approve 620 minimum. You'll get better rates at 680 and best pricing above 740.
Sometimes. Deductibility depends on your income level and changes with tax law, so check with your accountant before counting on it.