Loading
in Tustin, CA
Tustin buyers usually face one core question: conventional or FHA? Your credit score, savings, and how long you plan to stay answer it.
Both loans can close on a Tustin purchase. But they're built for different borrower profiles — and the cost difference is real.
Conventional loans aren't government-backed. Lenders set their own overlays, but most follow Fannie Mae or Freddie Mac guidelines.
You'll need at least a 620 credit score. Put 20% down and you skip private mortgage insurance entirely — that's a big monthly savings.
FHA loans are insured by the federal government. That insurance lets lenders approve borrowers they'd otherwise pass on.
You can qualify with a 580 score and 3.5% down. Scores between 500–579 require 10% down. FHA is forgiving on credit history gaps too.
The biggest cost difference is mortgage insurance. FHA charges an upfront premium plus monthly MIP for the life of the loan. Conventional PMI cancels at 20% equity.
HousingWire flagged the 30-year fixed hitting 6.57% with applications dropping over 10% week-over-week. At that rate level, FHA's MIP cost matters even more — it doesn't go away the way conventional PMI does.
If your score is 700+ and you have 5–10% saved, run the conventional numbers first. The long-term cost is almost always lower.
If your score is under 640 or your savings are tight, FHA is the practical path. Don't let perfect be the enemy of getting into Tustin now.
Only FHA-approved condo projects qualify. Not every Tustin complex is on the approved list — check before you make an offer.
FHA rates are often slightly lower, but MIP adds to the true cost. Rates vary by borrower profile and market conditions.
Yes — refinancing into conventional removes MIP once you have enough equity. That's a common move after a few years of appreciation.
FHA requires 3.5% with a 580+ score. Conventional goes as low as 3%, but PMI applies until you hit 20% equity.
Conventional typically closes faster. FHA requires an FHA appraisal, which adds a step and sometimes flags property condition issues.
FHA allows higher debt-to-income ratios — sometimes up to 57%. Conventional is stricter, usually capping around 45–50%.