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in Sacramento, CA
Sacramento buyers face a real fork in the road: FHA or Conventional. The right answer depends on your credit score, down payment, and how long you plan to hold the loan.
We run both scenarios for every borrower we work with. The difference in total cost over five years can be substantial. Rates vary by borrower profile and market conditions.
Conventional loans are not backed by the government. Lenders set their own requirements, but most want a 620 credit score minimum and 3-20% down.
Put 20% down and you skip mortgage insurance entirely. That alone can save hundreds per month on a Sacramento-area purchase.
FHA loans require just 3.5% down with a 580 credit score. Drop to 500-579 and you can still qualify — but you need 10% down.
The tradeoff is mortgage insurance. FHA charges an upfront premium plus monthly MIP. With less than 10% down, that MIP sticks for the life of the loan.
HousingWire flagged the 30-year fixed hitting 6.57% with applications dropping sharply. At that rate level, mortgage insurance costs matter more than ever — they compound the monthly payment pain.
FHA MIP never goes away if you put less than 10% down. Conventional PMI cancels automatically at 78% loan-to-value. Over a 30-year term, that gap adds up fast.
Conventional loans also have no upfront insurance premium. FHA charges 1.75% of the loan amount at closing. On a $500,000 purchase, that is $8,750 rolled into your loan on day one.
Credit below 620? FHA is your path. Conventional lenders will not approve you, and FHA's flexibility exists for exactly this situation.
Credit above 700 with at least 5% down? Run the conventional numbers first. The long-term mortgage insurance savings usually make it the stronger choice for Sacramento buyers planning to stay put.
If your score is in the 620-679 range, it gets closer. We model both options side-by-side. Sometimes FHA's lower rate offsets the MIP cost — sometimes it does not.
Yes. Once your equity and credit qualify, you refinance into a conventional loan and drop the MIP. Many Sacramento buyers use FHA as a stepping stone.
FHA loan limits are set by county each year. Contact us for the current Sacramento County limit — we track updates as they happen.
FHA rates are often lower on paper, but add MIP and the true cost flips. Borrowers with strong credit usually pay less overall with conventional. Rates vary by borrower profile and market conditions.
Yes. FHA allows 100% of your down payment to come from a gift. Conventional loans also allow gifts but may require some of your own funds depending on the loan size.
Above the conforming loan limit, you move into jumbo territory and FHA is not an option. Conventional or non-QM programs take over at that price point.
FHA allows higher DTI ratios — sometimes up to 57% with strong compensating factors. Conventional lenders typically cap at 45-50%. That flexibility helps Sacramento buyers with existing debt.