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in Redwood City, CA
Redwood City buyers choosing between conventional and FHA loans face a real trade-off: lower down payments versus lower rates. The 2026 conforming limit here sits at $1,249,125, so both programs handle most local purchases.
Your choice hinges on how much cash you have at closing and whether you want the smallest monthly payment. FHA lets you start with 3.5% down. Conventional typically requires 5% to 10% but rewards you with no mortgage insurance if you hit 20% equity.
Conventional loans are the default choice for Redwood City buyers with solid credit and a meaningful down payment saved. You'll need a 620 FICO floor, though 680+ gets better rates. The appeal is simple: put 20% down and skip mortgage insurance entirely.
If you're putting down 5% to 10%, conventional still works—you'll just carry PMI until you hit 20% equity. That insurance disappears automatically once you reach that threshold.
FHA loans open the door for Redwood City buyers with limited savings or credit in the 580–620 range. You can start with just 3.5% down, which means you keep more cash in the bank at closing.
FHA works well when you're stretched thin on down payment but your income is solid. The program is flexible on credit repair and past financial hiccups. On a $1,000,000 purchase, the mortgage insurance premium adds roughly $300–400 per month.
The down-payment gap is the headline difference. FHA lets you start at 3.5%; conventional wants 5% to 10% minimum. On a typical Redwood City purchase, that's a meaningful chunk of cash staying in your account with FHA.
Mortgage insurance costs differ too. Conventional PMI is temporary and tied to your equity. FHA's mortgage insurance premium is permanent and baked into your payment for the full loan term. On a $1,000,000 loan, that's a real monthly difference.
Choose conventional if you have 20% down saved and a FICO above 680. You'll skip mortgage insurance entirely and lock in a lower rate. Redwood City's median household income of $156,000 supports conventional borrowing up to the $1,249,125 limit comfortably.
Pick FHA if you're putting down less than 15% or your credit is still recovering. The 3.5% minimum down keeps your closing costs manageable. You'll pay mortgage insurance every month, but the lower entry cost matters when you're stretched.
No. FHA mortgage insurance stays for the entire loan term, even after you own 20% of the home. Conventional PMI disappears at 20% equity, but FHA's does not. Refinancing to conventional later is your only exit.
Conventional requires a 620 FICO minimum, though 680+ gets better rates. FHA goes as low as 580 FICO and is more forgiving of past credit issues. Both programs reward higher scores with lower interest rates.
Both conventional and FHA cap at $1,249,125 in 2026. That covers the vast majority of Redwood City purchases. Anything above that limit requires a jumbo loan, which has stricter terms and higher rates.
Conventional typically offers lower rates by 0.25% to 0.5%. If you put 20% down, you skip PMI entirely. FHA's permanent mortgage insurance adds $300–400 monthly on a $1,000,000 loan. Conventional wins on payment if you can save the down payment.
Both programs work for self-employed buyers, but FHA is slightly more flexible. You'll need two years of tax returns and profit-and-loss statements.