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in Lincoln, CA
Lincoln buyers face a real choice between conventional and FHA financing. Both loans fund purchases here, but the cost difference over 30 years can hit six figures depending on your down payment and credit score.
Most Lincoln borrowers assume FHA costs less because the down payment is lower. That's only true if you sell or refinance within five years—after that, the mortgage insurance usually makes conventional cheaper.
Conventional loans require 3-20% down and accept credit scores as low as 620. You pay private mortgage insurance until you hit 20% equity, then it cancels automatically—no refinance needed.
Rates vary by borrower profile and market conditions. Stronger credit scores get better pricing, and 20% down eliminates mortgage insurance entirely. This loan works best when you have decent credit and can put at least 5% down.
FHA loans accept 3.5% down with credit scores as low as 580. You pay an upfront mortgage insurance premium of 1.75% plus annual premiums that never drop off unless you put 10%+ down at purchase.
The mortgage insurance stays for the life of the loan on deals with less than 10% down. Most borrowers refinance to conventional after building equity, but you're betting rates don't spike when you need to switch.
The mortgage insurance rules separate these loans. FHA charges 0.55-0.85% annually forever on low-down-payment deals. Conventional PMI costs 0.3-1.5% but cancels at 20% equity without refinancing.
Credit pricing hits harder on conventional loans. A 640 score might cost you 1.5 points more than a 740 score. FHA pricing is flatter—the rate gap between good and average credit is maybe 0.5 points.
Choose FHA if your credit is below 680 or you can only put 3.5% down. The upfront and monthly insurance costs more long-term, but you'll actually get approved. Plan to refinance to conventional once you hit 20% equity and your credit improves.
Go conventional if you have 5%+ down and credit above 680. You'll pay less over time, and the insurance drops off automatically. Lincoln's market lets you build equity steadily—conventional loans reward that with lower costs as your home appreciates.
Yes, once you hit 20% equity and your credit improves. You'll need to qualify under conventional guidelines and cover closing costs, usually 2-3% of the loan amount.
Both take 25-35 days with competent lenders. FHA requires an extra appraisal review but that rarely delays closing if the property is in decent shape.
FHA caps loans at $644,000 in Placer County for 2024. Conventional loans go higher but require 10-20% down above that amount depending on the lender.
Some do in competitive situations. FHA appraisals can flag repairs conventional appraisers ignore, giving sellers more hassle before closing.
620 is the floor but you'll pay heavy rate premiums below 680. Most brokers push clients toward FHA under 660 unless they have 15%+ down.