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in San Marcos, CA
Most San Marcos buyers qualify for both conventional and FHA loans but pick the wrong one. The difference costs thousands in upfront fees and monthly payments.
FHA seems cheaper upfront with 3.5% down. Conventional often costs less over the loan lifetime if your credit is above 680.
Conventional loans require 3-20% down and credit scores above 620. You avoid upfront mortgage insurance with 20% down and can cancel PMI at 78% loan-to-value.
Rates vary by borrower profile and market conditions. Higher credit scores unlock better pricing that FHA can't match, especially above 740.
FHA loans accept 3.5% down with credit scores as low as 580. You pay 1.75% upfront mortgage insurance plus 0.55-0.85% annual premium that never cancels on 30-year loans.
Sellers can contribute up to 6% toward closing costs versus 3% on conventional. This matters in San Marcos where every dollar of cash counts.
Credit score creates the biggest gap. FHA approves 580 scores; conventional needs 620 minimum and prices best above 680.
Mortgage insurance works differently. Conventional PMI costs 0.3-1.5% annually and cancels. FHA charges 1.75% upfront plus lifetime annual premiums you can't remove without refinancing.
Pick FHA if your credit is below 680 or you need seller help with closing costs. The upfront insurance hurts, but you get approved where conventional won't touch you.
Choose conventional with 680+ credit and enough savings for 5-10% down. You save $150-300 monthly on a typical San Marcos property and can drop PMI in a few years.
Yes, refinance once you hit 20% equity and 620+ credit. This removes lifetime mortgage insurance and usually lowers your rate.
Both take 25-35 days typically. Conventional moves slightly faster with cleaner appraisals since FHA requires stricter property inspections.
Only if the complex is FHA-approved. Conventional accepts any warrantable condo, giving you more inventory to choose from.
740 or higher unlocks top-tier pricing. You'll beat FHA rates by 0.25-0.5% at that level.
Yes, both allow 100% gift funds. FHA is slightly more flexible about gift sources including non-relatives.