Question 1

Can I switch from FHA to conventional later?

Accepted Answer

Yes. Once you build 20% equity, refinancing into conventional removes mortgage insurance entirely. Many Merced buyers do this within a few years.

Question 2

Which loan has a higher loan limit in Merced County?

Accepted Answer

Both conventional and FHA limits apply at the county level. Merced County limits are below high-cost California counties — confirm current figures before shopping.

Question 3

Does FHA take longer to close than conventional?

Accepted Answer

FHA appraisals have stricter condition requirements, which can slow things down. Factor in extra time if the home needs repairs.

Question 4

Is conventional always cheaper than FHA?

Accepted Answer

Not always. With a lower credit score, conventional PMI can be pricier than FHA MIP. Run the numbers on both before assuming. Rates vary by borrower profile and market conditions.

Question 5

What credit score do I need for a conventional loan?

Accepted Answer

Most conventional lenders require at least 620. Better rates kick in at 680 and above.

Question 6

Can I use gift funds for my down payment on either loan?

Accepted Answer

Yes. Both FHA and conventional allow gift funds for down payment. FHA has more flexibility on the sourcing rules.

Conventional vs FHA Loans in Merced, CA