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in Solana Beach, CA
Solana Beach buyers often face a choice between conventional and FHA financing. Both get you into a home, but the upfront costs and monthly payments look very different.
Conventional loans favor borrowers with strong credit and larger down payments. FHA loans open the door for buyers with less cash saved or credit scores in the 580-620 range.
Conventional loans set the bar at 620 credit minimum, though most coastal California deals close with scores above 700. You can put down as little as 3%, but you'll pay mortgage insurance until you hit 20% equity.
These loans cap at $1,149,825 in San Diego County for single-family homes. Rates typically beat FHA by 0.125% to 0.25% for well-qualified borrowers, and the mortgage insurance drops off once you reach 78% loan-to-value.
FHA loans accept credit scores as low as 580 with 3.5% down, or 500 with 10% down. The upfront mortgage insurance premium runs 1.75% of the loan amount, financed into your mortgage.
Monthly mortgage insurance stays for the loan's life if you put down less than 10%. The loan limit sits at $1,149,825 in San Diego County, matching conventional. Sellers can contribute up to 6% toward your closing costs.
The biggest split comes down to mortgage insurance. Conventional MI drops off, FHA MI typically stays for life. On a $700,000 loan with 5% down, FHA's insurance costs about $380 monthly versus $275 for conventional.
Credit standards differ sharply. A 640 score gets approved for FHA easily, but conventional lenders want compensating factors at that level. FHA also allows higher debt ratios, accepting up to 56.9% in some cases versus 45-50% for conventional.
Choose FHA if your credit sits below 680 or you're stretching to cover the down payment. The upfront insurance costs sting, but you get approved where conventional would decline you. Plan to refinance to conventional once your score improves and you build equity.
Go conventional if you're bringing 5% or more down and your credit tops 700. The lower monthly insurance and better rates save real money long-term. Borrowers with 10-15% down almost always come out ahead with conventional financing in Solana Beach's price range.
Yes, but the complex must be FHA-approved. Many coastal condos don't maintain that approval, limiting your options significantly.
Conventional typically closes 3-5 days faster. FHA appraisals require extra property inspections that add time to underwriting.
FHA doesn't require reserves in most cases. Conventional typically wants 2-6 months depending on down payment and credit score.
Only by refinancing to conventional. FHA insurance stays for the loan life if you put down less than 10% at purchase.
Both treat it the same way. You'll need two years of tax returns showing stable or increasing income either direction.