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in Stockton, CA
Most Stockton buyers qualify for both conventional and FHA loans but don't realize which one saves them money. The right choice depends on your down payment, credit score, and how long you plan to own the home.
FHA loans get you in the door with less cash. Conventional loans cost less over time if you have decent credit and can put 10% down.
Conventional loans work through Fannie Mae and Freddie Mac guidelines without government insurance. You need 620 credit minimum, though 740+ gets the best rates.
Put down 20% and you skip mortgage insurance entirely. With 10-15% down, your PMI drops off once you hit 78% loan-to-value through payments or appreciation.
Stockton's market lets you buy up to $766,550 with a conforming conventional loan. Go higher and you're in jumbo territory with stricter requirements.
FHA loans require just 3.5% down if your credit is 580 or above. Drop to 579 and you need 10% down, but you can still get approved.
You'll pay 1.75% upfront mortgage insurance plus annual premiums that stick around for the loan's life with less than 10% down. This makes FHA more expensive long-term despite the easier entry.
FHA lets you finance the upfront insurance into your loan amount. Your debt-to-income can hit 56.99% with strong compensating factors, higher than most conventional guidelines allow.
Credit scores create the biggest split. FHA approves 580 scores while conventional typically needs 620 minimum, though some lenders go to 600.
Mortgage insurance works completely differently. FHA charges 1.75% upfront plus 0.55-0.85% annually for the loan's life. Conventional PMI ranges from 0.3-1.5% annually but cancels at 78% LTV.
Down payment flexibility favors FHA at 3.5% versus 3% conventional, but conventional lets you drop insurance faster with just 20% down. On a $400,000 Stockton home, that's $80,000 versus $14,000 to avoid monthly insurance.
Choose FHA if your credit is below 640 or you're scraping together the minimum down payment. The higher long-term costs beat renting while your credit improves.
Go conventional if you have 680+ credit and can put 10-20% down. You'll save thousands in insurance premiums and get better rate pricing.
Run the five-year total cost on both options. FHA often wins years 1-3, then conventional takes over as you build equity and avoid permanent insurance premiums.
Yes, refinance once you hit 20% equity and 620+ credit. This eliminates FHA's lifetime mortgage insurance and often lowers your rate.
Both take 21-30 days typically. FHA appraisals can add 3-5 days since inspectors must flag required repairs conventional loans don't mandate.
Conventional offers often win in multiple bid situations. Sellers worry FHA appraisals will kill deals over minor property condition issues.
You need 740+ for top-tier pricing. The jump from 739 to 740 can save you 0.25-0.375% in rate on a conventional loan.
FHA works for 2-4 unit properties if you live in one unit. You cannot use FHA for pure investment properties or second homes.