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in San Diego, CA
San Diego home prices demand smart financing choices. Conventional and FHA loans serve different borrower profiles, and picking the wrong one costs you thousands.
Your credit score and down payment size determine which loan saves you money. Most first-time buyers start with FHA, but that's not always the best move.
Conventional loans require 620 minimum credit and at least 3% down. You'll pay PMI only until you hit 20% equity, which you can reach faster in San Diego's appreciating market.
These loans shine for borrowers with strong credit and some savings. Rates drop significantly at 740+ credit, and you avoid the lifetime mortgage insurance trap that comes with FHA.
FHA loans accept 580 credit with 3.5% down, or 500 credit with 10% down. You'll pay 1.75% upfront mortgage insurance plus ongoing monthly premiums that never drop off.
This program works when your credit blocks conventional approval. The flexible underwriting helps self-employed borrowers and anyone with past credit issues get approved.
Credit score creates the biggest split. FHA accepts 580 while conventional needs 620 minimum, but conventional rewards higher scores with much better rates.
Mortgage insurance separates these loans more than anything. FHA charges 1.75% upfront plus annual premiums for the loan's life. Conventional PMI costs less monthly and cancels once you reach 20% equity.
Down payment flexibility favors FHA slightly at 3.5% versus conventional's 3% minimum. But conventional lets you buy higher-priced homes without hitting loan limits that cap FHA buyers.
Choose FHA if your credit sits between 580-680 or you're self-employed with complex income. The approval flexibility justifies the insurance cost when conventional lenders won't approve you.
Go conventional if you score 700+ and have 5% down or more. You'll save thousands on insurance over five years, and PMI disappears once your home appreciates to 20% equity.
Plan to refinance out of FHA within 2-3 years if possible. Once your credit improves or equity builds, switching to conventional eliminates that permanent insurance payment.
Yes, refinancing to conventional once you hit 20% equity eliminates FHA mortgage insurance. Most borrowers do this within 3-5 years as home values rise.
740+ scores unlock top-tier pricing. The rate jump between 740 and 720 typically costs more than the difference between 720 and 700.
Usually yes. Lifetime mortgage insurance adds $200-400 monthly that never goes away, making FHA significantly more expensive over 10+ years.
Both work if the building is FHA-approved. Conventional offers more condo project flexibility and lower insurance costs for strong credit borrowers.
Yes, 620 qualifies for FHA. But at that score you also qualify for conventional, which saves money if you have 5% down.
1.75% of the loan amount, typically rolled into the mortgage. On a $600K loan that's $10,500 added to your principal balance.