Question 1

What credit score do I need for each loan?

Accepted Answer

Conventional requires 620 minimum. FHA allows 580 for 3.5% down, or 500-579 with 10% down.

Question 2

Can I drop mortgage insurance on an FHA loan?

Accepted Answer

Usually no. Most FHA loans carry MIP for the full loan term. Refinancing to conventional is the common exit.

Question 3

Which loan has lower monthly payments?

Accepted Answer

Depends on your rate and insurance costs. FHA may have a lower rate but adds MIP. Run both numbers with your broker.

Question 4

Are FHA loan limits high enough for Sand City?

Accepted Answer

Monterey County is a high-cost area, so FHA limits are elevated above the national baseline. Ask us for the current limit.

Question 5

Can I use gift funds for a down payment?

Accepted Answer

Yes for both programs. FHA allows the full down payment to be gifted. Conventional has guidelines on sourcing gift funds.

Question 6

Which loan closes faster?

Accepted Answer

Conventional typically closes faster. FHA appraisals take longer due to stricter property condition requirements.

Conventional vs FHA Loans in Sand City, CA