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in Gilroy, CA
Gilroy buyers face a real choice: FHA or conventional. The right answer depends on your credit, savings, and how long you plan to stay.
We run both scenarios for every borrower. Sometimes the math surprises people. Here's what actually separates these two loans.
Conventional loans aren't government-backed. Lenders set terms based on your credit and finances. Strong borrowers get the best pricing.
You'll need at least 620 credit to qualify. Put down 20% and you skip private mortgage insurance entirely. That saves real money monthly.
FHA loans are backed by the federal government. That backing lets lenders approve borrowers with lower credit and smaller down payments.
You can get in with 3.5% down and a 580 credit score. The tradeoff is mortgage insurance — both upfront and monthly, for the life of the loan in most cases.
HousingWire flagged the 30-year fixed hitting 6.57% recently. At that rate, FHA's mortgage insurance cost matters more than ever to monthly budgets.
Conventional drops PMI once you hit 20% equity. FHA mortgage insurance typically stays for the loan's life if you put less than 10% down. That gap adds up fast in Gilroy's price range.
Conventional also has higher loan limits in Santa Clara County. If you're buying above FHA's ceiling, conventional is your only conforming option.
Credit below 620? FHA is likely your path. Credit above 700 with cash to put down? Conventional almost always costs less over time.
First-time buyers short on savings often start with FHA, then refinance into conventional once they've built equity. That's a real strategy we use.
Run the numbers both ways before deciding. A slightly higher rate with no mortgage insurance can beat a lower rate with MIP attached.
Yes. FHA loans work in Gilroy as long as the purchase price stays within Santa Clara County's FHA loan limit. Check current limits before you shop.
Most lenders require at least 620. Better rates kick in around 740 and above.
Not if you put less than 10% down. With 10% or more down, MIP drops after 11 years.
FHA requires 3.5% with a 580 credit score. Conventional goes as low as 3%, but you'll need stronger credit to qualify.
For strong credit profiles, yes. For borrowers near the minimum, FHA can price better. Rates vary by borrower profile and market conditions.
Yes. Many borrowers refinance into conventional once they hit 20% equity. That move removes mortgage insurance and can lower your payment.