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in Colfax, CA
Colfax buyers often debate between conventional and FHA loans. Both work here, but they serve different borrower profiles.
Your credit score and down payment determine which loan makes sense. FHA accepts lower scores. Conventional offers better rates for strong credit.
Conventional loans require 620 credit and at least 3% down. Lenders charge lower rates when you put down 20% or more.
You pay PMI if you put down less than 20%. That PMI drops off once you hit 20% equity. FHA mortgage insurance never goes away unless you refinance.
FHA loans accept 580 credit with 3.5% down. You pay 1.75% upfront insurance plus 0.55% to 0.85% annual premium for the loan life.
Sellers can contribute up to 6% toward closing costs. That flexibility helps Colfax buyers who are short on cash but have steady income.
Credit standards separate these loans. FHA accepts 580 scores. Conventional requires 620 minimum, but rewards higher scores with better pricing.
Mortgage insurance works differently. FHA charges upfront and monthly premiums for life. Conventional PMI drops off at 20% equity. That difference costs thousands over time.
Choose FHA if your credit sits below 640 or you need minimal down payment. The insurance cost is the tradeoff for easier approval.
Go conventional with 680+ credit and 5% down or more. You'll pay less monthly and can drop PMI later. Plan to refinance an FHA loan once your credit improves and equity builds.
Yes, FHA accepts 580 credit with 3.5% down. You'll pay higher insurance but approval is easier than conventional.
PMI drops automatically at 22% equity. You can request cancellation at 20% equity based on home value.
Conventional costs less with 700+ credit. FHA has cheaper payments below 660 credit despite higher insurance.
Sellers can contribute up to 6% on FHA loans. Conventional caps seller credits at 3% to 9% based on down payment.
Yes, once you hit 20% equity and 680+ credit. Removing FHA insurance saves $100 to $300 monthly on typical loans.