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in Daly City, CA
Choosing between conventional and FHA loans affects your down payment, monthly costs, and long-term expenses in Daly City. Both financing options help San Mateo County buyers purchase homes, but they work differently.
Conventional loans suit buyers with stronger credit and larger down payments. FHA loans open doors for first-time buyers or those with limited savings. Understanding the trade-offs helps you pick the right path.
Conventional loans aren't backed by government agencies. Lenders set their own guidelines, typically requiring credit scores of 620 or higher. You can put down as little as 3%, though 20% avoids private mortgage insurance.
These loans offer competitive rates for well-qualified borrowers. PMI cancels automatically once you reach 78% loan-to-value. Conventional financing works well for Daly City buyers with established credit and steady income.
You'll find more flexibility with property types and loan amounts. Rates vary by borrower profile and market conditions. Stronger credit scores unlock better pricing and lower monthly costs over time.
FHA loans carry insurance from the Federal Housing Administration. This protection lets lenders approve borrowers with credit scores as low as 580. You can buy a Daly City home with just 3.5% down.
The upfront mortgage insurance premium equals 1.75% of your loan amount. You'll also pay annual premiums that last the life of most FHA loans. These costs make monthly payments higher than conventional options.
FHA financing helps first-time buyers enter the market sooner. San Mateo County buyers with limited savings or recovering credit find this path accessible. The program sets loan limits based on county housing costs.
Down payment requirements split the two programs. FHA needs 3.5% with a 580 credit score, while conventional asks 3% but wants 620 or better credit. Your credit profile determines which option costs less monthly.
Mortgage insurance works differently between programs. Conventional PMI cancels when you hit 78% loan-to-value or when you request it at 80%. FHA mortgage insurance stays for the loan's life unless you put down 10% or more.
Loan limits matter in San Mateo County. FHA caps restrict how much you can borrow based on government guidelines. Conventional conforming loans follow similar limits but offer jumbo options above those thresholds for Daly City's pricier properties.
Choose FHA if your credit score sits between 580-680 or your down payment is under 5%. The higher monthly costs beat waiting years to build credit or savings. You'll pay more over time but get into your Daly City home now.
Pick conventional when your credit exceeds 700 and you have 5% or more saved. Lower rates and cancellable PMI save thousands long-term. The stricter approval standards pay off through reduced monthly expenses.
Your timeline matters too. FHA works for buyers who need fast entry with limited funds. Conventional rewards patient savers with better financial positioning. Talk with a mortgage broker about your specific credit, savings, and Daly City housing goals.
Yes, you can refinance from FHA to conventional once you build 20% equity and improve your credit. This eliminates mortgage insurance and often lowers your monthly payment.
Both programs take similar time to close, usually 30-45 days. Your documentation readiness matters more than loan type. Complete applications process quicker regardless of program choice.
Yes, but FHA requires the condo project to have FHA approval. Conventional loans accept more condo projects without special certification. Check project status before making offers.
Annual MIP typically runs 0.55% of your loan balance, divided into monthly payments. On a $600,000 loan, expect about $275 monthly for mortgage insurance premiums.
Yes, larger down payments typically earn lower rates on conventional loans. FHA rates stay more consistent regardless of down payment size. Rates vary by borrower profile and market conditions.