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in Hillsborough, CA
Choosing between a conventional loan and an FHA loan shapes your home buying journey in Hillsborough. Each option offers distinct advantages for buyers in San Mateo County.
Conventional loans provide flexibility for well-qualified borrowers. FHA loans open doors for those with smaller down payments or rebuilding credit.
Understanding these differences helps you select the mortgage that aligns with your financial situation and homeownership goals.
Conventional loans represent traditional mortgage financing without government backing. They typically require stronger credit profiles and larger down payments than FHA options.
These mortgages shine for borrowers with good credit and stable income. You can avoid mortgage insurance entirely by putting down 20% or more.
Conventional loans offer higher loan limits in San Mateo County. They also allow more property type flexibility, including investment properties and second homes.
Rates vary by borrower profile and market conditions. Stronger credit scores and larger down payments generally unlock better terms.
FHA loans carry insurance from the Federal Housing Administration. This backing allows lenders to approve borrowers with lower credit scores and smaller down payments.
You can qualify with as little as 3.5% down if your credit score meets minimum requirements. This makes homeownership more accessible for first-time buyers.
These loans accept credit scores as low as 580 for minimum down payments. Even scores between 500-579 may qualify with 10% down.
FHA mortgage insurance includes both upfront and monthly premiums. The upfront premium is 1.75% of the loan amount, while monthly costs continue for the loan's life on most purchases.
Down payment requirements separate these options significantly. Conventional loans typically require 5-20%, while FHA loans start at 3.5%.
Credit standards differ substantially. Conventional loans generally expect scores above 620, while FHA accepts scores as low as 580 for minimum down payments.
Mortgage insurance works differently between programs. Conventional insurance drops at 20% equity, but FHA insurance remains for the loan's life on most purchases.
Property standards vary as well. FHA requires homes meet specific safety and livability standards, while conventional loans offer more flexibility in property condition.
Choose conventional if you have strong credit and can manage a larger down payment. The ability to remove mortgage insurance and access higher loan limits benefits well-qualified Hillsborough buyers.
Select FHA if you're building credit or have limited down payment funds. The lower barriers to entry help you purchase sooner, though long-term costs may be higher.
Consider your timeline and equity plans. If you'll refinance within a few years, FHA's accessibility might outweigh its permanent insurance. For long-term holds, conventional often proves more cost-effective.
Your specific situation matters most. A mortgage professional can calculate actual costs for both options based on your credit, down payment, and target purchase price.
Yes, you can refinance from FHA to conventional once you build 20% equity and meet conventional credit standards. This removes ongoing mortgage insurance and often reduces monthly costs.
Rates vary by borrower profile and market conditions. Conventional loans typically offer lower rates for high-credit borrowers, while FHA rates stay competitive across broader credit ranges.
Both work in Hillsborough, though conventional offers higher loan limits for expensive properties. FHA has county-specific limits that may restrict options in higher-priced areas.
Conventional insurance costs less monthly and cancels at 20% equity. FHA requires upfront and monthly premiums that continue for most loan terms, increasing long-term costs.
FHA requires less for down payment at 3.5% minimum. However, the 1.75% upfront insurance premium often gets rolled into the loan amount rather than paid at closing.